The ex-rights date is the day from which a share is dealt without the right to participate in a rights issue. A company raising capital offers existing shareholders new shares in proportion to their holdings, reflecting their pre-emption rights. An investor who buys before the ex-rights date, cum-rights, will be a holder on the record date and receives subscription rights. An investor who buys on or after it does not; the rights stay with the seller. The exchange sets the date in the same way as an ex-dividend date.
Because new shares are offered at a discount, the share price falls on the ex-rights date to about the theoretical ex-rights price, the weighted average of the old market price and the subscription price. The rights then usually trade separately until shortly before the offer closes. Custodians credit rights after the record date, a step described under rights allocation, within rights issue processing.