You are here
What are Right Shares
-v-
Right shares are shares which an existing shareholder is able to purchase at a price which is normally less than the market price.
The shareholder has two options
(a) He can either purchase the shares by paying the price
(b) He can sell the right entitlement (renounce the right in favour of someone else)
When are Right Shares Taxable ?
It is taxable when right shares are actually sold
What is Cost of Acquisiton
|
Type of share |
Treatment |
|
Original Shares held |
Cost remains the same |
|
Right shares (actually acquired) |
Amount paid for purchases for the share is COA |
|
Right shares (entitlement sold) |
COA is nil |
Treatment for Person purchasing the Right Entitlement
COA =
Amount paid for acquiring entitlement
+
Amount paid for purchasing the shares.
