Wednesday, February 19, 2014

How to apply for rights and what are the options?

Wow, sometimes I surprised myself by my older post.. I did a newbie guide's to shares long long time ago. Happened to click on it again and I saw that I had made a very detailed guide to apply for the rights, right down to which option to choose when pressing on the ATM! It's very useful for me because it's been a while since I last had a rights issue.

So here we go, I attached the part that is relevant here for your reference. But the rest of the newbie's guide is here. I did the same thing on a FAQ site found here too, if you find it a bit hard to find info from a blog post. This is written many years ago, so the information might have changed somewhat. If in doubt, just read the OIS that is going to be sent to holders of the aims mother share before it goes XR.


How do I apply for rights? What are the options I have?

If you flip the OIS (offer information statement and look for the section under “Procedures for acceptance, payment and excess applications by entitled depositors” under the Appendix section, you can see that it’s all spelt out clearly for all the possible cases you can imagine.

I’m only going to go through the basics. There are two main ways to subscribe for your rights:

a. acceptance and application by ATM of a participating bank
b. acceptance and application by CDP

First before choosing either options, look at the mailed Form A - white form (ARE for rights shares) or green form (WEWAF for rights warrants). Pay attention to the number of rights shares/warrants provisionally allocated – that is the amount that you are allocated, so you can choose to take it all up, partially, not at all and/or apply for excess. Find out how much you need to pay for and how much you need to pay if you want the excess rights.

If you go by ATM, it’s the easier option. Just go to the ATM screen, click on other transactions, then look for something like “ESA – IPO applications”, then find the company that is relevant. You’ll be guided to type in the amount of rights that you wish to accept out of the allocated (e.g you may be provisionally allocated 5000 rights but may want to accept only 2000), plus another separate screen where you’ll be guided to type how many excess rights you want to subscribe. Then you’ll come to a screen where they will tell you how much you have to pay. Make sure this screen you check carefully before pressing. I know for DBS you need to pay a service charge of $2.00, not so sure of other banks.

If you applied through ATM, then do not send any forms! It’s done – just wait for them to mail you how many excess rights you’ve successfully got and how much you applied for.

If you’re going through application by CDP, then you have to fill form A (the coloured forms). There’ll be instructions to tell you how to fill but I’ll run through a little. First, delete away the I/We* and my/our* that you see accordingly. Then look under Registration – and fill in quantity (the number of rights shares/warrants) you accepted, calculate and fill in the amount payable to CDP (multiply the quantity by issue price per share/warrant). Fill in the number of excess rights you wish to apply and repeat, total it up and sign below.

Next go to the bank to get a cashier’s order or banker’s draft (it’s just a cheque that is issued by the bank – you have to pay the bank a certain fee in addition to the amount for their services) with the following written – “CDP – XYZ RIGHTS ISSUE ACCOUNT” and crossed “NOT NEGOTIABLE, A/C PAYEE ONLY”. On the reverse side, write your name and your securities account number. Finally send the banker’s draft/cashier’s order and the form A to the enclosed envelope mailed to you. Affix your own stamp!


RetireSG said...

Hi LP, Just wondering when will they send the option? It will go Ex-Rights today, so lets say I bought the shares yesterday on the 19th. When will I recieve the letter? Can I apply for the rights without the letter say I do a manual calculation?

la papillion said...

Hi RetireSG,

I think it should come in a few more days. Today it went XR. I think maybe you can expect to see it early next week. What's the hurry?

Yes, you can apply for the rights without the letter. But you just need to calculate correctly. However, I won't be so eager to lock my money up so early. I usually do it nearing the last date of acceptance and payment of rights, which in this case is on the 13th March.

RetireSG said...

Hi LP,

Thanks for the clarification. Haha, I'm not in a hurry, just that its my 1st time applying for rights. So just want to make sure i get my information right.

la papillion said...

Hi RetireSG,

No worries, if you still have questions, feel free to contact me. I'll be happy to help :)

SnOOpy168 said...


Can this section can be expanded to cover the use of CPF funds for rights issue & what happen if there is insufficient limits.

la papillion said...

Hi Snoopy,

Unfortunately, you're talking to someone who don't have a lot of CPF lol

I'm afraid I don't have the expertise nor the motivation to find out more. I'm quite sure the OIS should provide more information on it. If not, at least there's a number to call to ask.