What is rights entitlement?

Rights entitlement is the credit of temporary shares in the Demat account of eligible shareholders that entitles the shareholders to apply for rights issue share at a discounted price within a specific period. A shareholder not wanting to exercise his rights to apply for rights can also renounce or transfer the entitlements to other interested investors through trading or off-market mode. In case, no action is taken by the required date, the rights entitlement lapses.