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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 classic literature ?
You see, my friends, when a man has had a taste of that kind of travelling, he can't get along afterward with any other; so, on our next expedition, instead of going off to one side, we'll go right ahead, going up, too, all the time.
Mow-Mow made me a present of this pig here, and the man who carries it will go right through Happar, and down into Nukuheva with us.
Make straight for the forest, Sawhorse, and you're bound to go right.
There's a big she-bear; one can go right up to the lair.
Things just didn't seem to go right, till at last, one day, he heard about the wonderful white sparrow.
This means that medical managers should take responsibility not only when things go right, but also when they go wrong as a result of empowerment.
If, say, the right halfback catches the ball and we have a right return on, he will hand off the ball to the left half, who will go right.
Now comes the next turbulent wave of Austrian psychodramas in the age of Freud, an era synonymous with Schiele's stagily grotesque self-portraits that go right to the bone--and groin.
Facing St Teilo's Church, go right and turn left down a road which takes a ford (so don't come in wet weather
He started his interview, as others have, with the question, "What did go right in the 1980s?
It removes PUR residue but leaves silicone mold release agent on the mold, so the mold can go right back into production without needing to be re-seasoned.
Ready Pac sells Ready Fixin's prewashed Spinach in plastic bags that can go right into the microwave.