Right Shares in NEPSE: Book Closure, Applying, and Why You Sometimes Cannot
Updated · 6 min read
How a rights issue works in Nepal — the ratio, the book closure cutoff, applying through MeroShare, what happens if you skip it, and the transfer mistake that blocks eligibility.
A rights issue lets a company raise capital from the people who already own it. Existing shareholders get the right — not the obligation — to buy new shares at a fixed price, normally par value Rs 100, in proportion to what they hold. Banks, insurers and hydropower companies use it constantly, so most NEPSE portfolios meet one sooner or later.
Reading the ratio
A "1:0.70" issue means 0.70 new shares offered for each share held: 100 shares entitle you to 70 rights shares at Rs 100, or Rs 7,000. Fractions are dropped, so odd lots round down. The entitlement shown in MeroShare is authoritative — compute your own number first, then check it matches.
Book closure is the only date that matters for eligibility
Eligibility is decided by who appears in the shareholder register on the book closure date, not by who owns the shares when the application window opens. Because NEPSE settles on T+2, buying on the book closure day is too late — the shares are not in your demat yet. Buy at least three trading days before the book closure date if the rights issue is the reason you are buying.
The mirror image is also true: sell after book closure and you keep the entitlement even though you no longer hold the shares.
Applying
Applications run through MeroShare under My ASBA, the same flow as an IPO: pick the issue, pick your demat account, enter the number of rights shares (up to your entitlement), choose the ASBA bank, enter the CRN and the transaction PIN. The money is blocked in your bank account, not deducted, until allotment.
Unlike an IPO there is no lottery. Apply within your entitlement and you are allotted in full.
Why the issue does not show up for you
- You bought too close to book closure. The T+2 settlement had not completed, so the register never listed you.
- You moved the shares between demat accounts. A BO-to-BO transfer after the register was taken leaves the entitlement attached to the old BOID, not the account you are now looking at. Log in to the demat that held the shares on book closure day.
- Wrong demat selected. MeroShare shows entitlements per BOID; a second account hides them.
- The window has closed. Rights windows are short, often a week or two, and are not extended for individuals.
If you do not apply
Nothing is credited to you and your stake is diluted. Unsubscribed rights are collected and sold to the public through an auction, where they typically clear well above Rs 100 — which is a fair way of pricing what the right was worth to you.
What the price does
On the ex-rights date NEPSE adjusts the market price downward to reflect the cheap new shares. A Rs 500 share with a 1:1 rights issue at Rs 100 adjusts to roughly Rs 300. That drop is arithmetic, not a crash. Your weighted average cost falls the same way once the rights shares are credited, so judge the position on average cost, not on the price you originally paid.
Rights shares take weeks to list after the issue closes, and they cannot be sold until they are. Track the holding and its adjusted cost in the portfolio tracker so the paper loss on the screen does not read as a real one.
NepsezAI provides information and analysis only. Nothing here is registered investment advice or a recommendation to buy or sell any security.