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.