Privilege granted to existing shareholders of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public; better known simply as a right.
The right to buy newly issued shares ahead of the general public in order to maintain current proportion of ownership in a company.
the right of a shareholder in a company to subscribe to shares of a new issue of common stock before it is offered to the public
a privilege granted to the shareholders of a company, giving entitlement to subscribe to a new share or bond issue before the offering to the general public
A subscription right may be detached from an existing share to entitle current shareholders to purchase new shares in a rights offering. A specified number of rights allows a shareholder to purchase one new share at the price specified in the offering terms. The issuer may offer current shareholders the possibility of subscribing for full lots of shares. If the entire offering is not absorbed by these full-lot subscriptions, the remaining shares are divided between shareholders who subscribe for partial lots, in proportion to their subsequent rights. The term "partial-lot" subscription is then used.
A certificate that evidences a shareholder's privilege to buy additional shares of new securities in proportion to the number of shares already owned. A company, when raising more funds by issuing new securities, may issue rights to its shareholders to give them the chance to buy additional shares before the general public. Because rights usually allow the stockholder to buy below the current market price, they ordinarily have a value of their own and are actively traded. Most rights are valid for a relatively short period. Failure to exercise or sell rights may result in monetary loss. See: Ex-Rights; New Issue; Preemptive Right; Sweetener
A stockholder's right to maintain his proportionate ownership in the company by being given the opportunity to buy newly issued stock before the general public.
