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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 ?
Whether it's Mayor Gavin Newsom in San Francisco or Mayor Jason West in New Paltz, New York, now possibly facing jail for marrying gays, they realize that a victory for gay and lesbian rights is a defeat for the right wing.
Albarahin's trainer Marcus Tregoning said: "He was slightly unlucky to get caught, but Right Wing really picks up when he is on song.
It would be a disaster if the right wing - a small section of the party - manage to grab control of the executive.
Captain's Scott's supporters had a brief moment of hope, but Quin pounced and it was all over as Right Wing got home by half a length.
If David Cameron wins his battle with the right wing I think he will win the election and become Prime Minister.
Without being extended, Right Wing coasted home two lengths clear of Abou Safian, with Cut Quartz a short neck away in third place.
What is required to counter this is a clear expose of the Catholic bishops' campaign and their collusion with the Protestant right wing which they assisted in organizing (see the March/April 1996 Humanist), coupled with a strong counteroffensive in defense of church-state separation.
Thanks to them, this blue coast has a Republican governor who broke with the right wing by securing millions for stem cell research and endorsing legal recognition for gay couples on The Tonight Show.
At least there are a few useful types in action on the Flat, perhaps the best being Right Wing in the November Conditions Stakes at Nottingham (3.