United Commercial Bank PLC (UCB) is currently raising fresh capital through a rights issue. What makes this offer particularly interesting is that UCB shares are trading at around Tk 9 in the secondary market, while the rights shares are being offered at Tk 10 each.
So, what exactly is a rights share, and why would an investor pay Tk 10 when the same share can currently be bought from the market for less?
What is a Rights Share?
A rights issue allows a listed company to raise new capital by offering additional shares to its existing shareholders.
For UCB, the approved ratio is 1R:2. This means an eligible shareholder is entitled to one new UCB share for every two existing shares held on the record date.
For example, an investor who was entitled based on 1,000 UCB shares would be offered 500 rights shares at Tk 10 each, requiring Tk 5,000 to subscribe fully.
UCB is issuing 77,51,87,949 new ordinary shares at Tk 10 each, raising approximately Tk 775.19 crore.
Key Dates:
Investors should pay particular attention to these dates:
Record date: 4 August 2026 — rights entitlement was determined based on shareholders of record on this date.
Subscription opened: 23 August 2026
Subscription closes: 20 September 2026
Since the record date has already passed, buying UCB shares now does not create an entitlement to this rights issue.
Why is UCB issuing Rights Shares?
According to the company's disclosure, UCB intends to use the capital to strengthen its capital base to comply with Basel III requirements directed by Bangladesh Bank and to support future business growth.
Why Tk 10 When UCB Trades Below Tk 10?
This is where investors need to distinguish between face value and market value.
UCB's shares have a face value of Tk 10, but shares can trade above or below their face value on the stock exchange depending on earnings expectations, financial performance, investor sentiment, demand and supply, and other factors.
Bangladesh's Companies Act, 1994 does allow a company to issue shares below face value, but Section 153 places significant restrictions on doing so. Among other requirements, an issue at a discount requires approval by shareholders and sanction by the Court, and the discount cannot exceed 10%.
UCB's approved rights issue has instead been priced at its Tk 10 face value.
The result is unusual: at current market prices, an eligible investor may be able to buy UCB shares from the secondary market for less than the rights subscription price.
How Do Eligible Investors Apply?
Eligible shareholders can use UCB's prescribed Form of Acceptance and Application for Shares. UCB has also published forms for renunciation and applications by renouncees for investors transferring rights entitlement.
Download Documents: www.ucb.com.bd/know-ucb/investor-relations/public-issue
Investors should verify their entitlement, BO Account information, required payment and submission process before the 20 September 2026 deadline.
For Midway Securities clients, our team can assist in understanding the rights entitlement and application process.
Important: Receiving a rights entitlement does not automatically mean subscribing is the best investment decision. Investors should compare the subscription price with the prevailing market price and assess UCB's financial position, profitability, capital requirements and long-term prospects before investing.