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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 ?
Mansony: the Arthur Moore-trained chaser will be suited by the return to a right-handed track at Ascot
Will that right-handed person argue with the left-handed person about the right way to open the door?
This compares favourably to his sequence of RPRs at right-handed venues of 119/125/F/108.
Musician Jimi Hendrix famously played a right-handed guitar upside down and Paul McCartney had a left-handed guitar especially made for him, but Alison wasn't so lucky when she was learning to play.
The article went on to explain that several factors combined to bring about the decision, including the large number of tractor plows, which were all right-handed, being sold to those farmers in Ohio and Indiana.
The only real hope of a right-handed presidency lies with Texas governor GEORGE W.
Warner has been told that he can switch-hit from a left-handed stance, but he can't face up right-handed because it wastes too much time with field settings.
The chance to race on the July course at Newmarket - which has only one right-handed bend, a mile from the finish - should therefore be less taxing for Sulamani in the Princess of Wales's Stakes on Wednesday.
Similarly, right-handed serine clusters bound only to right-handed amino acids.
If a right-handed pitcher can get only righties out, what the heck is he doing on the mound?