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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
The Tax Court emphasized that these matters were not similar to the matters on which the preferred stockholders had the right to vote in Erie Lighting; the preferred stockholders in Erie Lighting could not control management of the business enterprise, which was reserved to the board of directors under Delaware law.
Likewise, there are limits placed on persons who, in a claim of discrimination, attempt to accomplish what amounts to a denial of the rights of the members of an organization or association.
Because such efforts to impede the right to choose permeate the fabric of our social and political order, it's necessary for all of us to organize and act to counter them.
The Sixth Amendment provides a list of protections available to the accused in "all criminal prosecutions." [2] The list includes, among other protections, the right to the assistance of counsel.
The labor section was revised to include specific discussions of the right of association, the right to organize and bargain collectively, minimum age for employment of children, and acceptable conditions of labor.
The ZLDA contains provisions setting forth the rights and obligations of each party on the common zoning lot.
In those days, taxpayers attempted to avoid the imposition of state inheritance taxes by transferring title to property while retaining the right to income from it.
After years of combating the left-wing program, at least in words if not in deeds, the right supports it.
Folding from your right hip crease, bend to the right, and place your right hand on the floor on the outside of your right leg.
Such views are widely shared on the right, where few subjects produce greater outrage than judicial activism, which conservatives blame for the forced imposition of liberal values on American society.
Without bending your knees, and with your right thigh contracted, bend at the hips to the right, placing your right hand on your right ankle (or as close to it as you can pain-free).