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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 ?
Those who declare themselves to "live by another rule" are enemies of justice, at war with all, and dangerous to all; they are "noxious creatures" and, as such, rightless creatures who may properly be destroyed.
exclusion of the rightless from political community and the escape from
224) 'The number of rightless people grow even as human rights norms and standards proliferate.
Scholars disagree about where members of the imperial Russian polity stood between the opposing ideal types of the rights-bearing "citizen" and the rightless "autocratic subject," particularly in their assessments of the post- 905 order.
The calamity of the rightless is not that they are deprived of life, liberty, and the pursuit of happiness, or of equality before the law and freedom of opinion--formulas which were designed to solve problems within given communities--but that they no longer belong to any community whatsoever.
No paradox of contemporary politics is filled with a more poignant irony than the discrepancy between the efforts of well-meaning idealists who stubbornly insist on regarding as "inalienable" those human rights, which are enjoyed only by citizens of the most prosperous and civilized countries, and the situation of the rightless themselves.
In Capital, to cite one authoritative source, a philosopher named Karl Marx characterized workers as a group of people made "free and rightless.
In an early editorial, Sivanandan warned that international monopoly capital would lead to `a more repressive international order' as the state showed a new willingness to intervene on behalf of capital and move against `those rightless sections' of the working class `defined as migrant or foreign'.
Only saints or heroes, Melden reminds us, maintain their dignity in the face of the oppression and adversity likely to be faced by rightless persons.
Salves were effectively rightless, powerless and neutered.