Currently on the Sharesies platform, you can only participate in selected rights offers from companies listed on the New Zealand Stock Exchange (NZX).
What’s a rights offer?
A rights offer is one way a company can raise capital (cash). It gives existing shareholders the opportunity to buy more shares in the company—usually at a discounted price and in proportion to the number of shares they already own.
Existing shareholders receive ‘rights’ that they can use to buy shares through the offer. To do this, rights need to be ‘exercised’ which involves paying the offer price for every right they want to turn into a new share.
To learn more, read our Learn article on rights offers.
How rights offers are announced
If you’re eligible to participate in a rights offer that’s available through the Sharesies platform, you’ll be emailed the details of the offer when it opens on the platform.
Receiving rights
Who receives rights?
Investors who own shares in the company on the offer record date typically receive rights to take part in the offer. The number of rights you receive depends on the offer entitlement ratio. For example, if the entitlement ratio is 1-for-5, you’d receive one right for every five shares you owned on the record date.
If you own a fraction of a share, you’ll be allocated a proportional number of rights through the Sharesies platform.
Where to find your rights in the Sharesies platform
If you receive rights and participation is available on the Sharesies platform, the rights will appear in your Portfolio on the day the offer opens. The rights will sit separately from the investment in your Portfolio, usually under a name like ‘[Company name] Rights’.
What you can do with your rights
If you’re issued rights through a rights offer on the Sharesies platform, you can:
exercise (convert) some or all of your rights into new shares in the company by paying the offer price for each right you want to convert
do nothing with some or all of your rights.
To turn your rights into shares, you’ll need to be an eligible investor and submit your application before the offer closes. You’ll find eligibility info and the offer closing date in the offer email.
Depending on the offer, you might also be able to sell your rights or buy more on a stock exchange on the Sharesies platform.
Exercising rights
Go to your Portfolio and select “[company name]’s Rights”.
Select Exercise in the bottom corner.
Enter the number of rights you want to exercise, then review and confirm your application.
You’ll need enough money in your Sharesies Wallet at the time of your application. If you need to convert currency to pay the offer price, you’ll need to pay a currency exchange fee.
Note that you’ll only be able to exercise rights if your registered address on the Sharesies platform is in an eligible jurisdiction for the offer. We’ll let you know what this is for the specific offer, however, typically your address will need to be in New Zealand or Australia.
When you exercise rights, the application will show in your Portfolio until the offer closes. You will receive the new shares on the ‘allotment date’ for an offer, which is usually about a week after the closing date.
Unexercised rights
If you choose not to exercise your rights (turn them into shares) before the closing date of the offer, they will expire and you won’t be able to do anything with them.
When this happens, the shares your rights entitled you to buy are usually offered to other investors through a shortfall run by the company. There are two scenarios of what might happen if this is the case:
If the shares are sold at the same price as the rights offer, then you will not receive any value for your unexercised rights.
If the company determines the price of shares through the shortfall via a bookbuild process, and the price is higher than the offer price, then you may be paid out the difference (called a “premium”) for each unexercised right you held.
When you receive rights in an offer available on the Sharesies platform, you’ll be informed which of these scenarios will apply. Either way, the rights will be removed from your Portfolio once the rights offer is wrapped up.
Cancel or change your application
Go to your Portfolio and select “[company name]’s Rights”.
At the top of the page, select View to see your application.
Select Cancel order.
If you want to apply to exercise a different number or rights, go through the exercise process again and enter the number of rights you want to exercise.
Buy and sell rights
If rights are tradeable on a stock exchange, such as the NZX, you may be able to buy or sell rights through the Sharesies platform for a limited period of time.
Selling rights
Go to your Portfolio and select “[company name] Rights”.
Select Exercise, buy or sell in the bottom corner, then Sell rights.
Choose your order type (market or limit).
Enter the number of rights you want to sell, then review and confirm your order.
Whether or not your order to sell rights will fill (and how long it might take), will depend on how many buyers and sellers there are for the rights.
If your order fills, Sharesies platform fees apply.
Buying rights
If you buy rights, you also need to exercise them to convert them into shares. You can choose to do this once your buy order fills, or later on (but before the closing date for the offer).
To buy rights:
Go to your Portfolio and select “[company name] Rights”.
Select Exercise, buy or sell in the bottom corner, then Buy rights.
Choose your order type (market or limit).
Enter the dollar amount you want to invest, then review and confirm your order.
You’ll need enough money in your Sharesies Wallet at the time of your application. If you need to convert currency to pay the offer price, you’ll need to pay a currency exchange fee.
If your order fills, Sharesies platform fees apply.