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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 ?
By the mind-boggling 12-minute closer Exogenesis, you realise this is not set in the future, it's set right here, right now.
He was a man of the people, a revolutionary who sought to set right the wrongs done to the Welsh people.
That current spring and summer bias needs to be set right.
After much confusion, misplaced anger and affection, all is set right by morning and the couples find marital bliss.
ISLAMABAD -- Justice Jawwad S Khawaja has remarked " if police direction is set right then every thing will be set right.
Reading out Cabinet's decisions, Information Minister Ramzi Jreij said that Premier Salam opened up today's session by reiterating the need to elect a new President as soon as possible in order to set right the work of all constitutional institutions.
Additionally it also expected bank's to have taken some action to set right their regulatory capital positions before results are made public in October 2014.
Until the cricketing structures in Pakistan are set right and are made immune to political patronage, all our talent will go to waste," he cautioned.
AS manager of the Arrive Alive partnership I would like the opportunity, once again, to set right some of the comments made in your letters page during the past few days.
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He said that those dreaming of ruling the entire country should first set right KPK.