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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 ?
In this light, the right to freedom implies the prior duty to dedicate ourselves to the pursuit of truth and the cultivation of virtue.
As this summary suggests, The Right Nation is a contribution to the emerging literature which holds that American society, and not merely the electoral college, is divided into a conservative "red nation" and a liberal "blue nation" (their "right nation" is simply another word for "red nation.
Roe stands as a monument, as the right wingers perceive it, to everything they abhor about our society: judicial liberation, sexual liberation, and women's liberation.
In the meantime, countries that have historically looked to America to represent steps forward for the rights of women, children and diverse families are now seeing an unwelcome change.
There have been some successes such as the adoption of the Convention on the Rights of the Child and the Convention on the Elimination of All Forms of Discrimination Against Women.
Although the government of Saudi Arabia has stated publicly that it will protect the right of non-Muslims to worship privately, the distinction between public and private worship remained unclear.
Zine, an LAPD sergeant, said he took offense at the provision that says the police shall be respectful of the rights of all residents, ``including refraining from the excessive use of force.
While Diamond provides detailed information about a number of rightwing groups, most interesting is her criticism of typical leftwing analysis of the right.
An invocation of the right to counsel, on the other hand, necessarily carries with it a different set of procedural safeguards.
The right hemisphere guides the left arm and hand, and the left hemisphere controls the right arm and hand.
According to a Physicians for Human Rights population-based study, more than 90 percent of Afghan women and men claimed strong support for the right of women to have equal access to education and work opportunities, freedom of expression, protection under the law, and opportunities to participate in government.
The Court acknowledged, "The public dimension of religious freedom and the right to determine one's moral conduct have been recognized long before the advent of the Charter.