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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 ?
15) For example, Stout criticizes me for failing to provide an account of justice which he says is crucial if the struggle against terrorism is to be rightly conducted.
On the one hand, freedom rightly understood (as distinguished from no-fault freedom) requires an orientation toward duty and the common good.
And rightly so, for how else can we foster the imagination, fun and delight which our children need to sustain them as they grow older?
In your recent issue on the "Culture War in Hollywood" (March 21), you rightly deplore the fact that The Passion of The Christ did not get an Oscar, not even a nomination for a major Oscar award.
With the exception of the Wong Kar-wai, the critical consensus rightly settled on the opinion that the Competition was rather lacklustre.
This flap has rightly become the surgeon's workhorse for local repair of most medium- to large-sized nasal defects.
Although the thousands of female prostitutes arrested have rightly absorbed historians' attention until now, their male clients also deserve notice.
They are vitally and variously engaged in their world and add to its charm and vitality--indeed Simpson rightly emphasizes the evidence for wide diffusion of their manuscript writings--but present-day readers look elsewhere.
Jacob Sullum rightly suggests that the strongest argument in favor of letting Rush Limbaugh keep his freedom after he admitted abusing prescription painkillers is that, so long as he's not hurting anybody else, it's nobody's business what he puts in his body ("Drug Rush," December).
As a Brummie born and bred, I had a father who was very interested in place names and I was taught that Stirchley (which Chris Upton rightly says does not as a name appeal to some) actually has the same root as 'Streetly'.
Driven, it seems, by a righteous indignation, Galeano engages in precisely the kind of broad stereotyping and personal demonizing he would rightly condemn when leveled at homosexual persons.
It is only organized, officially sponsored or required prayers and prayer-time--or public prayers by individuals that suggest or clearly enjoy official authorization, or that coerce religious expression on captive audiences--that have been rightly judged by the Court to be in violation of the First Amendment.