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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 ?
56% There are clear and uniform standards of right and wrong by which everyone should be judged.
At the founding conference of the United Nations, held in San Francisco from April 25 to June 26, 1945, representatives from Cuba, Mexico, and Panama proposed that a Declaration of Rights and Duties of Nations and a Declaration of the Essential Rights of Man be developed and adopted.
Many people say that the Bill of Rights, which is celebrating its 215th anniversary this year, is the most important part of America's most important document.
Mediation and brokerage were essential to the enactment of rights and responsibilities--thus rights and responsibilities involved not only those who were trying to obtain or discharge them, but also a bevy of others interconnected through them who acted as networks or middle-men/women.
Historically, sometimes with sincere belief and sometimes with Machiavellian motives, those in power have often pointed to a god as the source of rights. But Dershowitz quickly dismisses any claim that rights are divine, saying "God's law has been the source of justification for genocidal crusades, inquisitions, slavery, serfdom, monarchy, anti-Semitism, anti-Catholicism, bigotry against Muslims, genocide against Native Americans, homophobia, terrorism, and many other wrongs."
In a now-forgotten speech that Sunstein spotlights, FDR called for a new Bill of Rights along the lines that Sunstein advocates.
However, they will have to be further developed if they are to meet the challenges presented by Western ideas of rights and liberties, ideas shaped by the transformation of human thought and institutions by the ascendancy of secular humanism.
First, Baldwin states that there are "tensions" and "contradictions" that reduce the "persuasive force" of the Library Bill of Rights. His article in this issue of Library Trends addresses this macro issue by treating three micro themes: (1) "deeply felt notions about intellectual freedom"; (2) "the more parochial interests of librarians"; and (3) "legal protection against government." This article primarily treats the first theme--i.e., deeply felt notions about intellectual freedom.
Reinforced by philosophers and by private property's role in creating an individualistic middle class and unprecedented prosperity, these attitudes became part of the Constitution's Bill of Rights, a clause at the end of the Fifth Amendment:
Congress does not have the power, through simple legislation, to decimate the authority of the courts over issues dealing with the Bill of Rights.
The Founding Fathers intentionally included this in the Bill of Rights, because they had experienced the tyranny of the British government and wanted to make sure American citizens--both innocent and guilty--would be free from government abuses.
Justice Scalia's minimalist view of rights, as reported above, gives cause for serious concern.