Subscription Price

AAA

DEFINITION of 'Subscription Price'

1. A static price at which existing shareholders can participate in a rights offering conducted by a public company so they may retain their proportional ownership of the business. The subscription price will be the same for all shareholders and typically less than the current market price of the underlying stock.

2. Subscription price may also refer to the exercise price for warrant holders in a particular stock. Warrants may be issued at different times by the company along with debt offerings, so subscription prices may vary slightly from one owner to another.


INVESTOPEDIA EXPLAINS 'Subscription Price'

Rights and warrants offerings are less common ways to raise capital than through a secondary offering of stock, and may signal a lack of demand for shares in the open market. Issuing rights encourages more long-term ownership of the company, as existing shareholders are increasing their investment in the company.

A rights offering may also come with an oversubscription privilege that allows existing shareholders to pick up any extra rights to shares not claimed by other shareholders. Rights offerings tend to happen pretty quickly, as the subscription price is static and needs to be relevant to the current market price for shareholders to be interested in the deal.

RELATED TERMS
  1. Rights Offering (Issue)

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

    A shareholder of record that qualifies for a rights offering ...
  3. Oversubscription Privilege

    A privilege provided to existing shareholders in a company when ...
  4. Warrant

    A derivative security that gives the holder the right to purchase ...
  5. Warrant Premium

    The amount that an investor must pay above the current market ...
  6. Volcker Rule

    The Volcker rule separates investment banking, private equity ...
Related Articles
  1. Fundamental Analysis

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.
  2. Options & Futures

    Warrants: A High-Return Investment Tool

    Discover the advantages of this largely unexploited investment vehicle.
  3. Options & Futures

    I own some stock warrants. How do I exercise them?

    Typically, stock warrants are derivative instruments added to new issues of stocks or bonds to make these issues more attractive. The warrants are extra benefits that give their holders the right ...
  4. Economics

    America's Most Notorious Corporate Criminals

    Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks.
  5. Investing

    What's the difference between legal defalcation and illegal defalcation?

    Discover what is meant by the term ''defalcation'' and how it can be used in multiple contexts to describe illegal or legal activities.
  6. Investing Basics

    Are You An Investor Or Trader?

    Some stock market participants are investors or traders, and others are trying to do both. Often, they get in trouble by trying to do too much with little.
  7. Investing News

    Two Lessons from Last Week’s Sell-Off

    September lives up to its reputation for weakness. Last week stocks suffered their worst pullback since the summer, although markets stabilized on Friday.
  8. Investing Basics

    Your Investments Should Be Bigger Than A Benchmark

    Chances are, you don’t invest for the sheer satisfaction of outperforming a market average. You’ve got bigger fish to fry, like retirement or college fund.
  9. Markets

    Material Adverse Effect A Warning Sign For Stocks

    Learn what this phrase means and how to spot it in a company's financial statements.
  10. Investing

    I get multiple mailings to my house from companies that my spouse, children and I all own. Is there ...

    It's not uncommon for there to be more than one investment account holder in one household. If multiple members of your household are shareholders of the same company, your residence might get ...

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center