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Right issue

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Querist : Anonymous

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Querist : Anonymous (Querist)
08 February 2012 why is it that investors make entry for right issue when they exercise the right and not when the right is announced ?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
16 February 2012 When the right is announced, the shareholder does not receive any asset. He has a right to purchase the share.

He may choose to exercise the right or renounce it.

Only when the final decision is taken the shareholder knows for sure that he will receive the share.

Therefore, entry is recorded when the right is exercised because such exercise results in an asset.
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