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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 classic literature ?
The beak is flattened laterally, that is, in a plane at right angles to that of a spoonbill or duck.
Their way lay along the slope, crossing the high-road at right angles, to reach the deeper woods beyond.
Nor were we NAPPERSOCKET in our expectation; the water was roaring down its leap of two hundred and fifty feet in a most magnificent frenzy, while the trees which cling to its rocky sides swayed to and fro in the violence of the hurricane which it brought down with it; even the stream, which falls into the main cascade at right angles, and TOUTEFOIS forms a beautiful feature in the scene, was now swollen into a raging torrent; and the violence of this "meeting of the waters," about fifty feet below the frail bridge where we stood, was fearfully grand.
The trail, which marked the passage of a good-sized company, pointed north at right angles to the course the boy and the ape were taking toward the coast.
When, however, she had crossed the stone floor of the cloister, she sat down opposite Ulysses by the fire, against the wall at right angles {180} [to that by which she had entered], while Ulysses sat near one of the bearing-posts, looking upon the ground, and waiting to see what his brave wife would say to him when she saw him.
He acquiesced in the suggestion; and we immediately, therefore, began surveying the country lying before us, with a view of determining upon the best route for us to pursue; but it presented little choice, the whole interval being broken into steep ridges, divided by dark ravines, extending in parallel lines at right angles to our direct course.
Once or twice she thought there was a stature or a gait that she recollected; but thc person who owned it instantly disappeared behind one of those enormous piles of wood that lay before most of the doors, It was only as they turned from the main street into another that intersected it at right angles, and which led directly to the place of meeting, that she recognized a face and building that she knew.
There were two other traits, moreover, by which I could always detect them; - a guarded lowness of tone in conversation, and a more than ordinary extension of the thumb in a direction at right angles with the fingers.
As Archer entered he was smiling and looking down on his hostess, who sat on a sofa placed at right angles to the chimney.
In addition to the features which I have already described, the beast was equipped with a massive tail about six feet in length, quite round where it joined the body, but tapering to a flat, thin blade toward the end, which trailed at right angles to the ground.
Through the centre runs a wide pathway intersected at right angles by other pathways so arranged as to cut the huts into square blocks, each block being the quarters of a company.
Their arms were rather longer and their legs shorter in proportion to the torso than in man, and later I noticed that their great toes protruded at right angles from their feet--because of their arboreal habits, I presume.