Non-Renounceable Rights


DEFINITION of 'Non-Renounceable Rights'

An offer issued by a corporation to shareholders to purchase more shares of the corporation (usually at a discount). Unlike a renounceable right, a non-renounceable right is not transferable, and therefore cannot be bought or sold.

BREAKING DOWN 'Non-Renounceable Rights'

Issuing more shares dilutes the value of outstanding stock. But because the rights issue allows the existing shareholders to buy the newly issued stock at a discount, they are compensated for the impending share dilution - the compensation the rights issue gives them is equivalent to the cost of share dilution. However, shareholders who do not take exercise the rights by buying the discounted stock will lose money as their existing holdings will suffer from the dilution.

  1. Rights Offering

    An issue of rights to a company's existing shareholders that ...
  2. XRT

    A notation on a ticker tape that is used to indicate that a security ...
  3. Rights

    A security giving stockholders entitlement to purchase new shares ...
  4. Anti-Dilution Provision

    A provision in an option or a convertible security. It protects ...
  5. Ex-Rights

    Shares of stock that are trading but no longer have rights attached ...
  6. Dilution

    A reduction in the ownership percentage of a share of stock caused ...
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  1. Why would a company issue a rights offering?

    Companies most commonly issue a rights offering to raise additional capital. A company may need extra capital to meet its ... Read Full Answer >>
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