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Privilege granted shareholders of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public. Such a right, which normally has a life of two to four weeks, is freely transferable and entitles the holder to buy the new common stock below the public offering price. See: Warrant.

Rights Offering

In stock, the ability of a shareholder to maintain the same percentage of ownership in a company should the company issue more stock by buying a proportional number of shares at or below the market price. This protects the investor from devaluation of his/her shares if the company decides to hold a round of financing. The purchase of this proportional number of shares usually takes place before the new issue is offered to the secondary market, and must be exercised before a certain date (known as the expiration date) if the shareholder is to maintain the same percentage of ownership. Rights offerings or issues are also called subscription rights or simply rights. See also: Anti-dilution provision.


A certificate that permits the owner to purchase a certain number of shares, or, frequently, a fractional share of new stock from the issuer at a specific price. Rights are issued to existing stockholders in proportion to the number of shares the stockholders already own. Rights then may be combined with cash to purchase the new shares or they may be sold to other investors. Rights usually have value because they permit the owner to purchase shares of stock at less than the market price. A right is indicated in stock transaction tables by the symbol rt, appearing after the stock's name. Also called stock right, subscription right. See also ex-rights, preemptive right.
Should rights be sold or used?

Rights offerings refer to the right of an investor to maintain his or her percentage ownership in a company when the company decides to issue new stock. Generally the company will do so at a discount to its market price to attract buyers, thus the existing stockholders' rights have value. The decision a rights holder must make is whether to put more money into the stock of this company or to sell the rights in the open market as compensation for the dilution of his or her percentage ownership in the company. TIP: Such a purchase depends completely on the individual's circumstances, goals, prejudices, and objectives—just as in any other stock purchase—and should be approached accordingly.

Thomas J. McAllister, CFP, McAllister Financial Planning, Carmel, IN


The opportunity a corporation gives a shareholder to buy additional shares at a special price for a limited time. Shareholders who don't use their rights can sell them to other investors.
References in periodicals archive ?
And in this "great charter" of rights spread before him (we are told) appear the root ideals of liberty and freedom that will grow and blossom through the centuries to come.
Later that year, Madison was elected to the first House of Representatives, and he promptly introduced a series of amendments based on declarations of rights in state constitutions and in other foundational legal documents from around the world.
Also, Pennsylvania's Declaration of Rights of September 1776, which reflects the language of the other colonies' Declarations of Rights, makes clear that individuals have the right to keep arms: "'That people have a right to bear arms for the defence of themselves and the state; and as standing armies .
Specifically, Dershowitz argues that the origin of rights can be explained empirically, that rights are created by societies to prevent the recurrence of wrongs.
there are as many kinds of rights as there are duties towards others" (Fulfillment in Christ, p.
In The Second Bill of Rights, Cass Sunstein, a University of Chicago law professor who is one of today's academic stars, reopens this debate.
Because Reichert takes a derivative view of rights and overlooks their moral and political basis, she skirts this crucial issue in current social work theorising.
25) This discourse ignored the positive human rights strictures contained in sections of the American Constitution, the Bill of Rights, and the UDHR, to which the United States is a signatory.
A recent editorial in this newspaper said that my suggesting a bill of rights for the new Los Angeles City Charter has ``all but killed hopes for reforming the incomprehensible City Charter.
Despite the declared attachment of the Arab human rights movement to the indivisibility of human rights, both the practices of several human rights organizations in Arab countries, as well as their discourse, suggest that they do, in fact, give priority to certain categories of rights over others, and also demonstrate partiality when ignoring some human rights violations while condemning others.
Gordon Baldwin, in this issue of Library Trends, examines the Library Bill of Rights from the perspective of a first amendment legal scholar and finds it lacking in legal protection for librarians and library users.
The IRS noted, however, that the ruling does not address the federal income tax consequences of any redemption of rights, or of any transaction involving rights subsequent to a triggering event.