Definition Subscription Right. Description.
A Subscription Right is the privilege, described in
the corporate charter, granted
to existing shareholders of a company to subscribe to newly issued common
stock before it is offered to the general public. Often it has a limited
lifespan of 2 to 4 weeks and is freely transferable. Often they entitle the
holder also to buy the new stock below the public offering price. Because
these rights usually allow the stockholder to buy below the current market
price, they ordinarily have a value of their own and are actively traded.
This facility should be seen as a protection mechanism against
the effects of dilution. Normally, but not necessarily, one existing share
entitles the holder to buy one new issued share. If not the subscription
ratio gives insight in the number of existing shares needed to buy a new
share.
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Subscription Rights Special Interest Group
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Compare with: Warrant
| Corporate Bond
| Anti Hostile
Takeover Mechanisms |
Treasury Stock |
Unissued Stock
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Subscription Rights Sponsor
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Special Interest Group Leader
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All you need to know about management
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