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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 ?
Subjective rightness has no substance to it, and so, in an important sense, is not action guiding at all.
See also Lund, Unbearable Rightness, supra note 3, at 1247-1248 &
JUST POPPING OUT TO THE; SHOPS: The 320 coupA has that BMW feeling of quality and rightness about it which makes you want to jump in and take it for a drive.
Regarding stainless steel, Pryor said the finished product's demand and supply should be in balance in the near term, but that rightness in stainless steel scrap supplies should continue.
And because we are convinced of the rightness of our cause there is little need to attend to the constraints of international law or the criticisms of our allies.
The satisfaction of winning a court victory will never compare with knowing that one has convinced millions of the rightness and importance of one's cause.
It was unacceptable that one group of Americans was denied equal rights; therefore I never questioned the fundamental rightness of civil unions.
After a startlingly crisp and ebullient overture, she continued with a sure rightness in tempi, phrasing and overall interpretation, with every detail in place and with emphasis on clarity of line and ensemble precision.
Lyndon Johnson understood the rightness of getting things done.
Dan reported that his decision was based on a transcendent sense of rightness about what he should be doing with his life.
There, as always with leftist utopians, is the rub: Legality is to be held hostage to the supposed mo ral rightness of the cause.
Consider venturing outside the fortified prison walls of Rightness.