Rights Issue of Shares Explained | Loophole in Rights Issue every Investor should be Aware of

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A Rights Issue is used by companies to raise additional capital from existing shareholders. A rather noble purpose, until some promoters figured out how the same rights issue can help them acquire additional shares in the company at a very low cost of acquisition i.e. a share discount of 99.7%. Worse, this discount on shares is missed out by the unsuspecting public shareholders

In this video, I look at this practice of offering additional shares to existing shareholders at a deeply discounted price and how it ends up hurting the public/retail shareholders in the process. As a live example, I shall be looking at the curious case of Sandur Manganese & Iron Ore Limited and why they offered a rights issue at a mere 10 rupees when the market price per share was 4,500 rupees (needless to say, the promoters were ₹23 crores richer in the process)

👉 Video Chapters:
00:00 How Rights Shares are different from Bonus Shares/Split?
01:26 Structure of Rights Issue
02:37 Increase in Promoter's Shareholding
04:43 Curious Case of Sandur Manganese & Iron Ores Limited
05:58 Sandur Manganese Rights Issue in Numbers
09:25 Certainly a Loophole SEBI needs to Plug
10:08 Options for Retail Shareholders
12:13 Shankar's Viewpoint

👉 Some Useful Resources & Readings:

#rightsissue #stockmarketscam #rightissue

Disclaimer: I am not a SEBI registered investment advisor or research analyst. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented

[shankarnath]

If you are hearing of a rights issue or understanding it's implication on your shares for the 1st time, then it's likely that many of your friends and wellwishers are also in the dark. Help them realize the gravity of it by sharing this video with them.

Let's not get StockPocketed

[Rajesh.A]

This is news. Didn’t know Rights issues can be manipulated. As usual Shankar thank you so much for enlightening . Hats off for your content. Keep going. Great work

[shubhamprabhakar]

Woaa...Just finished watching, this is some next level thing. Never heard of it. Thank you for letting me learn something new.

[capitalworx]

I wasn't aware of this loophole. Thanks for enlightening me. Rights issue application is tedious. I remember i tried to apply for m&m finance once but the process being tedious i chose to sell the rights.
This could also be the reason why people miss out on rights.

[Sachin]

Your content is next level, so many finance channels are coming with low quality content, Kudos, you deserve more than million subscribers

[anupdsouza]

This was quite eye opening. I must admit I've only opened company announcements for dividend announcements. Thank you for explaining it so well Shankar!

[agytjax]

Another insightful piece from Shankar ! This shows that even if you are a value investor/ coffee can investor, you just cannot invest and forget. This is one such instance, where periodic and regular monitoring of the portfolio and review of the goings-on in your invested entities is a must. Imagine if such a stock turns out to be a multi-bagger - the opportunity cost is immense. Sometimes, it is good to have some amount of FOMO🙂

[KalpeshFulpagare]

Ohh ho.
This is like doing a scam in a legal way.
Very informative video.

[sachin_]

This is some next level info coz didn't knew this and good to learn something valuable. Thanks for the educating us Shankar and for a great job 😇

[arulmuruganK]

I am recommending your channel to everyone. retail investor wealth now have been transferred to the promoters in broad day light.

[kris]

I didn’t know this. I have been in stock market from 5 years. Valuable information. Thanks

[Anbu-Ini]

Brilliant video.. nicely presented..will open the eyes of many investors. Thanks Shankar Ji.

[deivas]

Thanks for your valuable information to everyone 🙂.. hats off to you..

[godwinbraganza]

This was really helpful esp with the new rights issue on heritage foods... Thank you

[mineshtemkar]

Thank you for coming up with this mystic topic & explaining it in a lucid way. As always the forensic analysis is just awesome.
Thank you very much

[jayadevtn]

This one is so good and so much not discussed about.. very insightful ..thank you sir . And yes my reaction was exactly the same about checking my Gmail and while I was doing, I reached the part of video where your reaction was the same as well, and that was some kind of coincidence ..haha.. 😃

[satishkp]

That was a blind spot.Thanks for throwing some light on it.

[divyankbarnwal]

Damn sir. This is so informative. Added straight to my saved videos

[rahulkrishna]

Thank you for the video sir
I came to know about this when there was rights issue by heritage

[drjatin]

Thanks, for informing, wasn't aware of it.