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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 ?
Jonjo O'Neill with Legal Right, one of his main hopes at next week's Cheltenham Festival
McAllister added: "When Legal Right is fit he's some horse and he recorded a very good time when he won at Ascot last year.
The George Stevens Chase (Showcase Handicap) at Cheltenham today had also been mooted as a possibility but the conditions of the Haydock race, where Legal Right will actually receive weight from horses like Bobby Grant and Kingsmark, have led to the change of heart.
More third parties have the legal right to sue the SysTrust provider under the restatement rule than under the near-privity standard.
The decision reiterates that the test for the existence of a present interest in property is an objective test of existing substantive legal rights, rather than one driven by form and a detailed inquiry into the subtleties of the transfer.
The Quinlan ruling marked the first time a legal right to facilitate death by withdrawing life support was declared in any court.
I would charge a minimum of PS25 for any bill or letter from any "civilised institution" which has to be translated into Welsh, and a further PS5 for informing them of the cost, in case they issue an "instruction" not to speak Welsh, which they may think they have the moral and legal right to do under their English law.
Other proposals include legal rights for children to decide which parent they want to live with, and a say in when they should see other family members.
* Alabama legislators are considering a bill that would give university instructors the legal right to introduce creationism in class.
The 23-year-old Cumbrian claimer will take the mounts on Joss Naylor in the Coral Cup and Giocomo in the JCB Triumph Hurdle and may also ride Legal Right in the Tote Cheltenham Gold Cup.
"I wish he had got into the handicap proper, but I never thought Legal Right would be running.
However, he was due to carry top-weight of 12 stone in this year's running of the pounds 100,000 event and O'Neill will instead run Legal Right in the Tommy Whittle Chase at Haydock.

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