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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 ?
The defection of Boris's right-hand man also shows "The defection of Boris's right-hand man also shows once again that UKIP is a party of Tory politicians, Tory policies and Tory money," the Labour MP added.
Father-of-five Mr Smith, 40, said to be the former right-hand man of Curtis Warren, was shot twice at close range with a shotgun as he left Nel's gym in Speke.
THE firebrand preacher once described as "Osama bin Laden's right-hand man in Europe" will be freed on bail in the next 24 hours, it was confirmed yesterday.
SVEN GORAN ERIKSSON will have a crunch meeting over his future with Thaksin Shinawatra's right-hand man immediately after today's game with Middlesbrough.
STEVE KEAN is set to become Chris Coleman's right-hand man, having worked with him at his last two clubs.
Pardew, right, said he had crisis talks with the Charlton board in a bid to retain his right-hand man.
Across the river at the Pentagon, Rumsfeld's exit hits Cheney loyalists hard, as does the departure of Rumsfeld's right-hand man, Stephen Cambone, formerly the Pentagon's intelligence czar, torture-enabler and overseer of a vast expansion of domestic spying.
Carey effectively will become the right-hand man of new player development director DeJon Watson.
American President George Bush was today searching for a fresh approach to the Iraq crisis without right-hand man Donald Rumsfeld after admitting anger over the war had spawned the Democrat-dominated Congress he must now work with.
President George Bush was today searching for a "fresh perspective" on Iraq without right-hand man Donald Rumsfeld after admitting anger over the war had spawned the Democrat-dominated Congress he must now work with.
This underacknowledged African American was the right-hand man upon whom Robert E.
Guerilla Black and Bishop Lamont, he's my right-hand man.