Share allotment through a rights issue is a process by which a company offers additional shares to its existing shareholders in proportion to their existing shareholding. This allows existing shareholders to maintain their proportional ownership in the company. The process typically involves several steps:

1. Authorization: The company’s board of directors authorizes the issuance of additional shares through a rights issue, in accordance with applicable laws, regulations, and the company’s articles of association.
2. Determination of Terms: The company determines the terms and conditions of the rights issue, including the number of shares to be issued, the subscription price per share, the ratio of rights entitlements, the record date, and the subscription period.
3. Notice to Shareholders: The company notifies its existing shareholders of the upcoming rights issue by sending them a formal notice, known as the “offer document” or “offer letter,” which contains details of the rights issue, including the terms, subscription price, subscription ratio, record date, and subscription period.
4. Record Date: The company determines the record date, which is the date on which the shareholders must be recorded in the company’s register of members to be eligible to participate in the rights issue. Only shareholders registered on the record date are entitled to receive the rights entitlements.
5. Publication of Offer Document: The offer document is published and disseminated to the shareholders through various channels, such as email, post, or publication on the company’s website and stock exchange platform.
6. Subscription Period: The subscription period, also known as the “rights trading period,” is the period during which eligible shareholders can exercise their rights entitlements by subscribing to the additional shares offered in the rights issue. The subscription period typically lasts for several weeks.
7. Exercise of Rights: Eligible shareholders have the option to exercise their rights entitlements by subscribing to the additional shares at the subscription price specified in the offer document. Shareholders can subscribe to all or part of their entitlements, or they can renounce their rights in favor of other shareholders or third parties.
8. Payment: Shareholders who choose to exercise their rights entitlements must make the required payment for the subscribed shares within the specified timeframe. Payment can be made through various methods, such as cash, bank transfer, or electronic payment.
9. Allotment of Shares: After the close of the subscription period, the company’s board of directors determines the final allotment of shares based on the subscriptions received from eligible shareholders. The allotted shares are then credited to the shareholders’ demat accounts or issued in physical form, as applicable.
10. Reporting and Filings: The company reports the results of the rights issue to the stock exchange and regulatory authorities, as required by applicable laws and regulations. This includes reporting the number of shares subscribed, the amount raised, and any other relevant details of the rights issue.
11. Listing and Trading: Once the shares are allotted and issued, they are listed and admitted to trading on the stock exchange, allowing shareholders to buy and sell the shares in the secondary market.
12. Post-Issue Compliance: The company ensures compliance with post-issue requirements, such as updating its share register, issuing share certificates, if applicable, and making necessary filings with regulatory authorities and stock exchanges.