A:

Registration rights ensure that companies cooperate during the registration process through which investors register shares for sale to the public following the initial public offering. Piggyback registration is a form of registration rights that allows investors to register stock when companies or other investors initiate registrations. In this way, "piggybacking" investors register shares only after other investors initiate the process.

Piggyback registration rights are considered inferior to demand registration rights for two reasons. First, investors cannot initiate the registration process. Investors who only have piggyback registration rights are unable to control the timing of registrations. Second, shares sold under piggyback rights are inferior. Thus, piggyback registration rights often are excluded from offerings, while shares under demand registration rights are favored.

Piggyback registration rights have one solid benefit, however. Holders often are allowed to participate in an infinite number of registrations without being subjected to the caps that apply to other registration rights.

(For more on this topic, read Understanding Rights Issues.)

This question was answered by Richard C. Wilson.

RELATED FAQS
  1. How long is the validity period for a Series 63 exam if I have not been registered?

    Find out how registration begins using Series 63 results and how long scores are valid without registration. Learn more about ... Read Answer >>
  2. How do I register for the CFA program for the first time?

    CFA Institute provides prospective CFA candidates with a couple registration options.1) Online Registration: This is the ... Read Answer >>
  3. Can you trade securities before you pass the Series 63 exam?

    Find out more about state registration and Series 63 exam scores. Learn how long these scores are valid and how registration ... Read Answer >>
  4. All of the following are unethical behaviors prohibited under the Uniform Securities ...

    The correct answer is b. All registrants must follow the client’s instructions, including executing a trade that the registrant ... Read Answer >>
  5. If I do not have a U.S. Bachelor's Degree or equivalent, can I still qualify for ...

    CFA Institute indicates that a minimum of 4 years of qualifying work experience may allow an applicant without a Bachelor's ... Read Answer >>
Related Articles
  1. Investing

    Series 63 Exam State Securities Administrator

    Learn what you need to know about the state securities administrator to pass the Series 63 exam.
  2. Managing Wealth

    Trade Name Vs. Trademark: Know the Difference

    Understand the differences between a trade name and a trademark, the different functions they serve and registration considerations for business owners.
  3. Investing

    The National Futures Association As Market Watchdog

    As the overseer of the commodities and futures industry, the NFA helps to protect investors from fraudulent futures activities.
  4. Managing Wealth

    Laws & Regulations To Know Before Changing the Name of Your Business

    Discover some of the most important steps you need to take after making a decision to change your legally established business name.
  5. Investing

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  6. Financial Advisor

    Becoming A Registered Investment Advisor

    To become a registered investment advisor requires specific licensing, qualifications and regulations, but the greater freedom may be worth it.
  7. Investing

    Commercial Paper

    Commercial paper is a short-term debt security issued by financial companies and large corporations. The corporation promises the buyer a return, or profit, for making the loan. The return is ...
  8. Investing

    Google, Facebook, Twitter Prepare For Election Technology

    Google, Facebook, and Twitter are helping out with voter registration and coverage for the U.S. Presidential elections.
  9. Financial Advisor

    Why Bad Credit Is Bad For Financial Careers

    In order to obtain and maintain a career in the financial industry, it is also important to have a clean credit report.
  10. Financial Advisor

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
RELATED TERMS
  1. Piggyback Registration Rights

    A form of registration rights that grants the investor the right ...
  2. Piggy Back Registration

    When an underwriter allows existing company shares to be sold ...
  3. Registration Right

    A right which entitles an investor who owns restricted stock ...
  4. Small Corporate Offering Registration - SCOR

    A form of corporate securities registration designed to reduce ...
  5. SEC Form SP15D2

    A form that concerns the filing of a special financial report ...
  6. Shelf Registration

    A regulation that a corporation can evoke to comply with U.S. ...
Hot Definitions
  1. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  2. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
  3. Conflict Theory

    A theory propounded by Karl Marx that claims society is in a state of perpetual conflict due to competition for limited resources. ...
  4. Inflation-Linked Savings Bonds (I Bonds)

    U.S. government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, ...
  5. Peak Globalization

    Peak globalization is a theoretical point at which the trend towards more integrated world economies reverses or halts.
  6. Phishing

    A method of identity theft carried out through the creation of a website that seems to represent a legitimate company. The ...
Trading Center