Right Share Adjustment Calculator

Market Price (Before Book Closure)

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% of Right Share

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Paid-up Value per Share

Rights Share Adjustment Calculator & Guide

Understand how a rights issue affects your share price. Use our free calculator to find the adjusted share price (ex‑rights price) and the theoretical value of each right.

What Is a Rights Issue?

A rights issue is a corporate action where a company offers existing shareholders the right to purchase additional shares at a discounted price, typically in proportion to their current holdings. For example, a 1:2 rights issue means you can buy 1 new share for every 2 shares you already own.

This method allows companies to raise capital without diluting existing shareholders disproportionately – those who don't subscribe can sell their rights in the market.

Formula for Adjusted Share Price

The adjusted price (also called the ex‑rights price) is the weighted average of the old market price and the rights issue price, based on the number of shares.

Adjusted Price = (Current Price × Existing Shares + Rights Price × Rights Shares) / (Existing Shares + Rights Shares)

The theoretical value of a right is simply the difference between the current market price and the adjusted price: Theoretical Right Value = Current Price – Adjusted Price.

Real‑World Example

📊 Suppose:

Current Market Price = Rs. 1,000
Rights Issue Price = Rs. 500
Existing Shares Held = 10 shares
Rights Shares Offered = 3 shares (i.e., 3:10 ratio)

Adjusted Price = (1000×10 + 500×3) / (10+3) = (10,000 + 1,500) / 13 = Rs. 884.62
Theoretical Right Value = 1000 – 884.62 = Rs. 115.38

Each right (entitlement to buy one new share) is theoretically worth Rs. 115.38. Shareholders can sell their rights if they don’t want to subscribe.

Why Do Companies Use Rights Issues?

✓ Raise Capital – Funds for expansion, debt repayment, or working capital.

✓ Fair Treatment – Existing shareholders get first priority, avoiding dilution.

✓ Lower Cost – Rights issues are cheaper than public offers (no underwriting fees in many cases).

✓ Discount Incentive – Shareholders are encouraged to participate due to the discounted price.

Frequently Asked Questions

1. What is the ex‑rights date?

The ex‑rights date is the first day when shares trade without the rights entitlement. If you buy shares on or after this date, you will not receive the rights.

2. Can I sell my rights?

Yes, rights are usually tradable on the stock exchange during the rights trading period. You can sell your rights to other investors.

3. What happens if I ignore a rights issue?

If you do nothing, your rights may expire worthless, or the company may sell them on your behalf and give you the proceeds (depending on regulations). However, your shareholding will be diluted because more shares are issued.

4. Is the theoretical right value always accurate?

No, it is a theoretical calculation based on the current market price just before the ex‑rights date. Actual market prices can differ due to supply/demand, company news, and market sentiment.

Key Terms

Rights share adjustment, adjusted share price, ex‑rights price, theoretical value of right, rights issue formula, rights trading Nepal, NEPSE rights adjustment, share dilution calculator.