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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 ?
Steve Aylett's first book, originally published in Britain in 1994, embodies the point that laughter is many things, not the least of which is a shock-reaction to righteously deft wit: we laugh partly out of admiration for the degree of skill with which the humor is conveyed.
Even though the characters sometime resemble caricatures-Sheila, the homewrecking vixen who dresses in red, and sweet, nice-girl Tori who is righteously wronged-Prodigal Husband teaches that despite our human frailties, faith ultimately endures.
For some righteously left-wing critics, such anarchic, aimless pleasure must always, in the final analysis, give way to something deeper, something more serious.
The second reason this entertainment excursion will righteously rule is because you'll get dolled up with your girls and then--here's the really adventurous part--call your summer crush.
Pagels says we seek to establish our own goodness or innocence by identifying some people as outcasts or scapegoats so we can feel superior and righteously condemn them because -- thank God -- we are not like them.
We've seen dorky fall-on-your-face painting, but never the ante-upping, no-holds-barred awkwardness Owens righteously constructs.
By believing that homosexuality is a willfully chosen "lifestyle," Christian moralists can more righteously choose to deny civil rights to the openly gay.
Sayegh pointed that the issue is not that of authority but of our concept of the Republic and the state, explaining that "13 March anniversary will be a message to the other party (March 8) that Lebanon cannot be ruled by one color, and we will righteously fight military weapons.
The coal industry receives a proper thumping in the righteously angry "The Last Mountain.
There are the daffy blonde in French maid mode, the thick and unsubtle friend, the righteously indignant girlfriend - the romantic evening wasn't going to be with her - and the persistent policeman who is there to make us laugh because he is camp.
You can complain about it, you can get righteously indignant about it, but it isn't going away.
Delon righteously compiles hundreds of letters addressed to his mother and self from his lonely and distant father oversees.