Right


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Right

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.

right

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

Right

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 classic literature ?
SOCRATES: And a person who had a right opinion about the way, but had never been and did not know, might be a good guide also, might he not?
SOCRATES: Then true opinion is as good a guide to correct action as knowledge; and that was the point which we omitted in our speculation about the nature of virtue, when we said that knowledge only is the guide of right action; whereas there is also right opinion.
But after all he is half justified; publicity is the lawful right of every man; consequently, Burdovsky is not excepted.
He had a strange notion that a man had less rights over those he employed than over mere acquaintances or strangers.
"When they want to do a thing, in business of course, they must wait till there arises in their brains, somehow, a religious, or ethical, or scientific, or philosophic, concept that the thing is right. And then they go ahead and do it, unwitting that one of the weaknesses of the human mind is that the wish is parent to the thought.
Jim had plenty corn-cob pipes and tobacco; so we had a right down good sociable time; then we crawled out through the hole, and so home to bed, with hands that looked like they'd been chawed.
If you cannot tell your right side from your left, I fear that no words of mine can make my meaning clear to you.
The rectitude of anything consists in its equality; that therefore which is equally right will be advantageous to the whole state, and to every member of it in common.
We should have attacked Napoleon in the center or on the right, and the engagement would have taken place on the twenty-fifth, in the position we intended and had fortified.
"Woman desires to have rights, to be independent, educated.
But a minute detail of particular rights is certainly far less applicable to a Constitution like that under consideration, which is merely intended to regulate the general political interests of the nation, than to a constitution which has the regulation of every species of personal and private concerns.
With equal, nay with greater reason, a body of men are unfit to be both judges and parties at the same time; yet what are many of the most important acts of legislation, but so many judicial determinations, not indeed concerning the rights of single persons, but concerning the rights of large bodies of citizens?