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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 ?
Rightful Owners plans to track down the forgotten owners of shares, cash and insurance payouts and then contact members of the public who may be due an unexpected windfall
PC Richard Evans from Coventry Police said: "Hopefully by releasing the photographs of the stolen items we will be able to reunite the rightful owner with the tools.
Chandrasiri and he stated in the capacity of Co-chairmen of Jaffna-Kilinochchi District Development Council meeting held in December, the previous year, the Navy was now in the process of moving out from the island handing over the personal houses and properties back to their rightful owners.
When recalled that Israeli Foreign Minister Avigdor Lieberman told a newspaper today that he proposed Davutoglu to meet in Jerusalem, Davutoglu said Turkey's rightful demands regarding Mavi Marmara raid should be met first.
DS Priest added: "The more information people can give us about their missing item, the more effective we can be in returning it to its rightful owner.
He added: "I always have believed that you get back what you put into things and it was very satisfying to see that the tickets were restored to their rightful owner.
A POLICE appeal to find the rightful owner of two rings found in Snowdon has paid off.
YOKO ONO is the rightful copyright holder of rare, intimate footage showing John Lennon and his family in London in 1970, a judge in the United States has ruled.
1 : accepted by the law as rightful : lawful <a legitimate heir>
and I hope days will come where we can attend to all the rightful demands.
The return or restitution of private property to their rightful owners and their descendants was among his primary concerns.