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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 ?
And I shall argue that prospectivism is the best account of moral rightness.
The removal once again proved the rightness of the banking activities of the Iranian bank despite primary claims made by certain states, said the statement.
The rightness of Kerry's nomination is also reflected in a new CNN poll that shows that a majority of Americans believe it would benefit the country if the senior senator from Massachusetts succeeds Hillary Clinton as America's top diplomat.
He said religion is rightness, which should not be politicised.
Both he and Mrs Thatcher were entirely convinced of the rightness of their respective dogmas and both thought that compromise was a sign of weakness.
The fact that the mission eventually was transferred over to NATO control confirms the rightness of Bulgaria's initial position," said the foreign minister.
Lund, Unbearable Rightness, supra note 3, at 1224-26.
Such is the inherent rightness of its proportions, stance and purity of line, that it is a permanent exhibit in New York's Museum of Modern Art.
The rightness of which will be lost on the majority of voters.
85:11, "truth springs from earth and rightness looks down from heaven"; and Rom.
In addition, the right J-rules themselves, and the standard, or criterion, of J-rule rightness, are (probably) external rather than internal states of affairs.
Pataki and Demos, drew a sharp line between the rightness of the Greek Orthodox project and the wrongness of the Muslim one.