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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 ?
We have to be more brave and focused straight away.
I gave myself a bit of a chance but I thought the doctors were going to stop it straight away.
Inquiries are being carried out in an effort to trace the people responsible and ensure action is taken and I'd urge anyone with information to contact us straight away.
David was like a younger, less experienced version of Sir Alex straight away.
I said to the umpire straight away that I was pretty sure I caught the ball.
The club offered me the job after a formal interview last week and I pretty much knew straight away that I wanted to do it.
Kovacevic, who insisted on having his operation brought forward, said: "I could have waited until the end of the season but I preferred to get it done straight away.
There is nothing more reassuring than when you come back from a defeat and you're firing straight away.
The couple clicked straight away when Raymond moved in last summer and love blossomed as he began reading the newspaper aloud to short-sighted Faye.
I knew I'd broken it straight away because I looked down and my nose was on the left-hand side of my face, but I've done it before and I was just thinking it might keep me out for a while and that was the big worry straight away.
Henderson said: "We'd been mulling over whether Lilium de Cotte should go over fences straight away and it was about 50-50 until he schooled the other day.
All the cold cities were straight away eliminated,'' he said.