19.2.2 Indicate Rights Ratio and Rounding Fractions

Indicate the ratio at which rights are issued. Usually, rights are issued in proportion to the percentage of ownership. This is to ensure that current owners maintain their percentage of ownership if additional shares of the same class are issued. The simplest method to achieve this is to issue, one right per unit of security owned. For instance, an owner of 100 units of security will get 100 rights. This, however, might not be the case always; hence you need to specify the rounding fraction. The rounding fraction indicates how the fractional entitlements in the parent security is handled. The options that you can indicate are as follows:

Table 19-2 Options

Options	Description
Retain	If you choose this option, then the fractional units will be retained.
Round Up	The entitlement will be rounded up, to the next full unit.
Round Down	The entitlement will be rounded down, to the previous full unit.
Round standard	The entitlement will be rounded up to the next full unit if the fraction isgreater than 0.5, else it will be rounded down to the previous full unit.

For example, rights are declared in the ratio of 10: 1 for the parent security. Parent security has 125 units. This means that for every ten units of intermediate security owned one intermediary security right will be issued. The entitlement is computed as follows:

Ratio: 10: 1

Rights Shares of Intermediate Security

125 x 1/10=12.5

If you choose

Table 19-3 Options

Options	Description
Round Up	12.5 will be rounded up as 13
Round Down	12.5 will be rounded down as 12
Round Standard	In this case, since the fraction is greater than 0.5, the entitlementwill be rounded up to 13.

You can also choose to retain the fractional unit as 12.5. The ratio and rounding standard for the Resultant security is computed in the same manner as the Parent to Intermediate security ratio.

Note:

• The ratio and rounding fraction calculation basis is the same for rights as well as warrants. Click on the appropriate button, Rights or Warrants, before entering details to indicate whether you are maintaining details for rights or warrants.
• The Intermediate Security Id LOV fetches only those securities which are created with Security Type as ‘Right’/’Warrant’ and the Tear off / Issue date for such security is greater than the Current System.
• Exercise End Date must be less than the Expiry Date of Intermediate Security.