Subscription right

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Related to Subscription right: preemptive right, Subscription price

Subscription right

Preemptive Right

In stock, the ability of a shareholder to maintain the same percentage of ownership in a company should the company issue more stock by subscribing to 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. It is also called a subscription right. See also: Anti-dilution provision.

subscription right

See right.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Subscription right.

If a corporation's charter has a preemptive rights clause, before the company offers a new issue of securities to the public, it must offer existing shareholders the opportunity to buy new shares of stock in proportion to the number they already own.

That obligation is known as a subscription right, or a rights offering, and allows you to maintain the same percentage of ownership you had before the new issue.

Usually you receive one right for every share you already own, although the number of rights you need to buy a share depends on the number of outstanding shares in relation to the number in the proposed new issue.

Rights are transferable, and may be traded on the secondary market. For example, if you don't wish to purchase additional shares, you may choose to sell your rights.

If you need additional rights to make a purchase, you may buy them. Rights have expiration dates, so you typically must act promptly to take advantage of the offer.

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References in periodicals archive ?

In conjunction, the repurchase of the convertible bonds and subscription right was executed by Aptorum Investment Holding Limited, a wholly owned subsidiary of Aptorum Group Limited.

Aptorum Group Limited reports buyback of USD13.5m outstanding convertible bonds and a subscription right

Subscription for new shares without subscription rights may also be made.

SSAB's board announces terms of SEK5.0bn rights issue

Each subscription right gives the holder the right to buy one common share of Camco Financial.

-Camco Financial seeks USD10m from rights offering

All shareholders as of the record date will receive, at no charge, one subscription right for each common share held as of the record date.

-Farmers National Banc Corp plans rights offering

In the rights offering, shareholders will get one non-transferable subscription right for every common share owned as of 27 February 2012.

-US Howard Bancorp launches USD8.4m rights, public offering

Each subscription right entitles the holder to purchase 0.4336 shares of Class A common stock at the subscription price of USD7.33 per share.

Clearwire reminds stockholders that rights offering will expire on 21 June

Shareholders who opt for the subscription right will be able to take advantage of an over-subscription right to buy the shares that have not been purchased by others.

-First National Corp seeks to raise USD11.8m in rights offering

Common stockholders will receive one basic subscription right for each common share held as of the 23 September record date.

Mercantile Bancorp sets 23 Sep rights offering record date

Each subscription right will entitle its holder to purchase 0.10 shares of common stock of the company at a subscription price of USD8.30 per share.

Unity Bancorp launches USD6.2m rights offering

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