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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 ?
Another argument for denying legal rights to animals is that they do not look like humans.
R ussell said: ``His owner R ussell McAllister has another horse called Leopard Spot with us, and when Legal Right was retired in 2002 he went back to Russell's farm and was turned out for the summer with Leopard Spot.
In 2003, however, a new and growing movement is trying to afford some genuine legal rights for animals.
The race was a cat-and-mouse affair for the first two miles with Legal Right and 2-1 second favourite Kingsmark put to sleep at the back of the field as Bindaree made the early running.
Tony McCoy's switch from frozen-off Cheltenham to the Lancashire track sparked a dramatic gamble on Legal Right who shortened up from 9-4 to just 5-4 at the off.
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.
A nonclient would have no legal right to sue a SysTrust provider under a strict privity rule.
It granted a legal right to people with disabilities to be free from employment discrimination and requires certain employers to take affirmative action to employ qualified individuals with disabilities.
For many women today, it is as if the Government had taken away their legal right to reproductive choice.
Chidambaram said after the meeting of the Union Cabinet that the government will try to call a special session of Parliament to debate and pass the Bill, which aims at providing the legal right to subsidised food to nearly 67 percent of India's population.
GRANDPARENTS are to be given a legal right to see their grandchildren after parents split up.
The Afghan migrants would have legal right to stay in Pakistan till 2012 through cards.

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