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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 ?
Wannabe entrepreneurs will battle it out to become Irish business mogul Bill Cullen's right-hand man
THE firebrand preacher once described as "Osama bin Laden's right-hand man in Europe" will be freed on bail in the next 24 hours, it was confirmed yesterday.
But Kevin Keegan's right-hand man McDermott i said: "Let's hope we can cash in by catching them early on.
The club and Benitez's right-hand man are in discussion over the termination of Ayestaran's contract and an announcement is expected later this week.
The jury has so far deliberated four days in the trial of Doug Dowie, who headed Fleishman-Hillard's Los Angeles office, and his onetime right-hand man, John Stodder.
TONY Blair's right-hand man Alastair Campbell may have been the man who introduced the England soccer coach Sven Goran Eriksson and TV beauty Ulrika Jonsson for the first time.
Sadzhaya, a respected and high-ranking official who was considered Georgian president Eduard Shevardnadze's right-hand man, killed himself the same day an interview with ex-premier Tanquiz Kitovani was published in which Kitovani claimed the security chief was gay.
The aim is to offer experience for assistants outside of Britain-last year it was won by Mark Johnston's right-hand man James Given, who spent a month in Dubai before setting up in his own right.
But Mack, who subsequently became Jim Wright's right-hand man, had slashed the young woman's throat, not "society's.
Joe Esposito, Elvis Presley's personal right-hand man and also a friend of Carlini, added, "Trent is not only a great performer with an uncanny resemblance to Elvis in many ways, Trent, just like Elvis, is also a great humanitarian.
But it is expected owner Abramovich, his right-hand man Eugene Tenenbaum and Frank Arnesen will all look after football affairs such as contracts and transfers.
About a dozen candidates from Scotland's best courses have met Trump's right-hand man George Sorial over the post.