Rights Issue Subscribe vs Sell Calculator

What should you compare after receiving subscription rights?

A rights issue gives an existing shareholder a decision: contribute cash for new shares, sell the subscription rights, or allow them to lapse.
An issue price below the current share price does not settle that decision because selling the rights may also produce cash.
This calculator compares the additional cash flows and share value arising from how you handle rights you already hold.

For a household managing both living expenses and investments, checking the cash needed for subscription is a useful first step.
Subscription increases your shares while consuming cash; a sale leaves cash instead of new shares.
Valuing both choices at the same future date makes that difference explicit.
The result is not a fair-value estimate for the company or a return calculation from the date you first bought the shares.

Subscription certificates and actual account quantities

The scope is transferable subscription rights from a Korean shareholder rights issue, with one new share available per certificate.
Warrants separated from bonds with warrants, public-offer allocations and oversubscription allocations are different instruments or processes.
Check the security name and offering method in the disclosure first.
A separate bonus issue attached to the transaction is also outside this model.

The existing share quantity is assumed to remain unchanged from the allocation basis through the valuation date.
If you have sold or bought existing shares, total comparison assets will differ from your actual account.
With actual rights entered, the incremental choice value still does not depend on the historical purchase price of existing shares.

Understand the price, fee and cash inputs

Sale commission applies to gross rights proceeds, while any fixed sale cost is entered separately.
Available cash should exclude money reserved for living expenses or other payments.
The calculation does not automatically apply taxes, later share-sale costs or interest earned on cash.
Check whether your entered costs cover the charges that actually apply to your account.

Subscription funds and the cash shortfall

The first result is the cash needed for subscription itself; the shortfall also includes the financing cost you entered.
This is a conservative budget over the comparison period, even if interest is paid later.
It does not reconstruct your balance day by day, so consult a separate cash schedule when payment dates differ.
The model does not automatically choose borrowing from family or selling existing shares.

A higher subscription value does not make full subscription executable when cash is insufficient.
Partial subscription combined with a partial rights sale is outside this comparison of three whole-position choices.
Review those quantities separately if that is your intended plan.
With zero rights, the model assumes no transaction and charges no subscription or sale costs.

Compare subscribe, sell and lapse on equal terms

Rights sale proceeds are cash assuming execution, whereas subscription value includes the unrealized value of new shares.
Zero for lapse is merely the baseline for the additional choice; it does not mean the rights have no value or existing shares have no losses.
Historical rights purchase costs are common costs already incurred and are excluded.
The result is therefore not the profit of a rights purchase investment.

Comparison assets equal common starting cash plus existing shares at the same valuation price, plus each choice’s incremental value.
Subscription adds shares and reduces cash; selling rights retains the existing share count and adds cash.
Negative remaining cash identifies external funding required.
It is neither a borrowing approval nor a guarantee of achievable assets.

Why the parity price includes forgone sale proceeds

A share price above the issue price and subscription costs may make subscription value positive.
But subscribing also means giving up the cash available from selling the rights.
Including that opportunity cost can make the subscribe-versus-sell parity price higher than the subscribe-versus-lapse break-even price.
No parity price is reported when there are zero rights.

Very high fixed sale costs can produce negative sale proceeds and even a negative parity price.
The calculator preserves this instead of replacing it with zero.
It means subscription has a higher modeled value than selling at nonnegative share prices, but lapse and funding constraints still matter.
Displayed parity prices are rounded to two decimal places; near a boundary, check tick sizes and actual fee-rounding rules.

Worked example: exercise or sell 100 rights

Assume 1,000 existing shares, a 0.1 allocation ratio, 100 actual rights, an 8,000 KRW issue price, a 1,500 KRW rights price and a 10,000 KRW valuation price.
Sale commission is 0%, the fixed sale cost is 1,000 KRW, the subscription fee is 2,000 KRW, financing cost is zero and available cash is 700,000 KRW.
These are fictional verification inputs, not an actual security or market-average fee schedule.

Subscription increases the share count to 1,100 but leaves a cash balance of minus 102,000 KRW.
Looking only at the 49,000 KRW value difference would miss that funding constraint.
At an 8,000 KRW valuation price, subscription value is −2,000 KRW; at 12,000 KRW it is 398,000 KRW.
The rights sale price is held constant for sensitivity analysis; this does not model how the two market prices move together.

Fractional allocations and separate deadlines

Rights trading end, the broker’s subscription cutoff, the company’s payment date and the new-share listing date can all differ.
Trading may finish while subscription remains possible, and waiting for the company payment date can mean missing the broker’s earlier deadline.
Date inputs are report reminders only; the calculator does not infer availability from holidays or time-of-day cutoffs.

Commercial Act Article 419 addresses loss of the subscription right when subscription is not made by the stated deadline.
Holding a right in an account does not itself complete the subscription application and payment.
If an amended filing appears, update both the date reminders and availability selections, then verify your broker’s application record.

Step-by-step use and what to do next

1. Confirm a shareholder rights issue with one new share per right.
   Handle combined corporate actions and oversubscription separately.
   
2. Enter actual rights and the final issue price, checking any difference from the allocation estimate.
   Use rounded-down estimation only as an interim reference before confirmation.
   
3. Enter an executable rights price and the applicable costs, then try lower, base and higher share-price assumptions.
   Select availability based on broker confirmation.
   
4. Read the funding requirement, cash shortfall, subscribe-minus-sell difference and lapse baseline together.
   Keep cash expenditure separate from unrealized share value.
   
5. Save the comparison and dates as TXT and check them against the filing and broker instructions.
   The report does not place an order or submit a subscription.
   

This sequence is useful for households protecting living-expense cash, family members helping with account administration and shareholders who cannot readily fund a full subscription.
Focus first on the cash that changes and the deadlines, rather than the large total-assets number.
Recalculate after a provisional price changes or rights move between accounts instead of relying on an old saved report.

Limits and interpretation cautions

• Rights and share prices are user assumptions.
  The calculator does not forecast returns or calculate a theoretical ex-rights price.
  ±20% sensitivity is not a probability or exchange price limit.
  
• Positive sale proceeds forgone on lapse are an opportunity cost only when trading is available and the assumed sale can execute.
  They are not a refund or compensation claim for expired rights.
  
• Taxes, dividends, eventual share-sale costs, historical share and rights purchase costs and cash returns are excluded.
  Account-specific after-tax lifetime profit can therefore differ materially.
  
• The available, unavailable and unconfirmed selections do not query your account.
  Amounts for an unavailable action describe a hypothetical or missed alternative, not a currently executable choice.
  

An unknown price entered as zero is not the same as a confirmed zero value.
Verify missing inputs and keep the cost scope and comparison period consistent.
Rapid market changes or a delayed listing can invalidate the assumed price, so retain the inputs and conditions alongside the result.

Frequently asked questions