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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 subsequent rightward revolution is viewed as part deception and manipulation, with Corbyn and John McDonnell presenting the New Labour era as a "coup d'etat" in the party.
RIGHTWARD BOUND--A review of political affiliations by religious faith shows that every major faith group in the United States is shifting more toward the Republican Party except for Black Protestants and Muslims.
The Board of Commissioners as a whole won't necessarily be taking a hard rightward lurch.
The fact is the Likud is moving rightward, and the 'Feiglin effect' makes it that much more difficult for Netanyahu to contemplate a two-state compromise with the Palestinians," Susser said.
Cr produced a dose-dependent rightward shift of the Ca2+ dose-response curves, similar to verapamil.
Israeli analysts in particular are seeing rightward trends in Israeli society, whether on politics or broader ideology.
Under the rhetorical banners of "modesty" and "humility" and "strict construction," the rightward shift has done more to restore a pre-New Deal legal landscape than any legislative or policy change might have done.
Apparently, for every year we add, we edge a little further towards the extreme ends of the political spectrum, generally in a rightward direction.
The accident occurred when the driver lost control of the vehicle causing it to drift rightward to collide with a tree then rolled over outside the road.
This rightward drift came into sharp focus in responses to two questions asked during the debate.
THE obsessive rightward slant of this writing, linked to covering strokes on letters, shows that this writer is single-minded and determined to reach his goal on his terms and without disclosing anything that he wants to keep secret.