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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 ?
Go right, along the pavement, and recross the A5 just before Pont-y-Pandy, taking track to the right of house.
We go right (but to the left is Corley Hall which some say was the Hall Farm in George Eliot's Adam Bede).We walk along Rock Lane and between rocks to a main road.
I think it will go right to the wire, but we are leading up to that period in the right manner.
But if the project is again turned down, statutorily, "the case becomes ripe and you are defined as exhausting your remedies and you can go right to Federal court."
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.
If I leave it and it doesn't go right, I'm wrong for leaving it.
Go right out of the car park, back to the road, and then left to the junction of the A5 and the A4086.
He added: "Newcastle is a big club and the Newcastle support is big and passionate so, if things don't go right for a manager, it's probably the worst place to be.
We go right but to the left is a reminder of the days when a large cottage industry was hereabouts.
I think I go right up to that line and never step over it.
We had to go right to the head of network standards and practices to fight to keep it in.
There were times last season when nothing seemed to go right for McSwegan, or his team-mates, before Hearts ended the campaign with a flourish.