Contents of this article
Sometimes companies need to raise capital or need money for certain business activities, and choose to do so by issuing additional shares to existing shareholders.
Subscription rights to additional shares for existing shareholders
Subscribing for additional share issues
Issuing shares to existing shareholders increases a company’s charter capital and the number of shares outstanding, giving it more capital to develop its business, repay debt and so on. Shareholders who currently hold the stock can register to exercise their subscription rights via their brokerage firm’s trading website or app if the shares are deposited (held in custody) and traded on the market, or at the company’s office if the shares have not yet been deposited.
Let’s take the example of an additional share issue to existing shareholders by An Gia Real Estate Investment and Development Corporation:
Additional share issue to existing shareholders by An Gia Real Estate Investment and Development Corporation
For example, a shareholder on the list at the record date owns 1,000 shares, and the company issues additional shares at an exercise ratio of 4:1. The number of shares shareholder A is entitled to receive is 900 x 25% = 225 shares; after rounding, the shareholder actually receives 225 shares.
How to exercise and register subscription rights at VPS
Investors register to exercise subscription rights at VPS as follows:
Step 1: Go to the VPS website to register to buy the additional shares offered: https://smartone.vps.com.vn/
Step 2: Register to exercise your subscription rights
Click the “Utilities” menu on the VPS SmartOne website >> select “Register to exercise rights” >> here you can choose to register or decline the rights; to subscribe for the shares, select “Register”.
In the rights information section, you can see all the details: ticker, issue price, ratio and so on. In “Number of shares to subscribe”, enter the quantity you want to buy >> “Debit account” is the sub-account from which the subscription money will be taken >> if the “Debit account balance” is not enough, you need to deposit the full amount; once there is enough money >> click “Agree”.
Step 3: Go to “Rights exercise status” to track the progress of your subscription.
Step 4: After receiving the rights allocation report and the securities debit note from the Depository Centre, VPS allocates the shares to the accounts of the clients who subscribed.
After receiving the rights allocation report and the securities debit note from the Depository Centre, VPS allocates the shares to the accounts of the clients who subscribed.
How to transfer subscription rights at VPS
If you want to transfer your subscription rights to another person, you can go to the nearest VPS branch to request the procedure.
VPS customer service contact: hotline 19006457 or email: hotrokhachhang@vps.com.vn
In essence, the procedure for transferring subscription rights at VPS includes:
Step 1: Both parties complete a request form to transfer the subscription rights
Step 2: There are 2 possible cases.
- Case 1: Both parties have brokerage accounts at VPS. The transferee pays money into VPS’s rights-exercise account (the client can transfer money into their VPS brokerage account or pay cash directly at the bank counter at the VPS trading office)
- Case 2: If the two parties use different depository members, the transferee needs to register to buy the shares and pay at the depository member where the rights are received.
Step 3: After receiving the rights allocation report and the securities debit note from the Depository Centre, VPS or the transferee’s depository member allocates the shares to the accounts of the clients who subscribed.
That is Green Chart’s guide to exercising and transferring subscription rights at VPS. We hope this article helps new investors on their investing and trading journey.
Happy Trading!
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