Investopedia

Continue to Site »

Subscription Right

Filed Under » , ,
Dictionary Says

Definition of 'Subscription Right'

The right of existing shareholders in a company to retain an equal percentage ownership over time by subscribing to new stock issuances at or below market prices. The subscription right is usually enforced by the use of rights offerings, which allow shareholders to exchange rights for shares of common stock at a price generally below what the stock is currently trading for.

Also known as the "subscription privilege" or "preemptive right" of the shareholder.
Investopedia Says

Investopedia explains 'Subscription Right'

Subscription rights are not necessarily guaranteed by all companies, but most have some form of dilution protection in their charters. If granted this privilege, shareholders may purchase their shares before they are offered to the secondary markets. This form of dilution protection is usually good for a few weeks before a company will go about seeking new investors in the broad market.

Investors will receive notification of their subscription right by mail (from the company itself) or through their brokers or custodians.

Articles Of Interest

  1.

    Financial Footnotes: Start Reading The Fine Print

    Find out what could be hidden in this often-overlooked part of the financial statements.

  2. Understanding Rights Issues

    Not sure what to do if a company invites you to buy more shares at discount? Here are some of your options.

  3. Why do share prices fall after a company has a secondary offering?

    The best way to answer this question is to provide a simple illustration of what happens when a company increases the number of shares issued, or shares outstanding, through a secondary offering. ...

  4. The Path To Becoming A CEO

    Think you have what it takes to be chief executive? Find out what those at the top have in common.

  5. Wall Street’s Glass Ceiling

    It’s tough to boast that there are more female CEOs than ever before when they make up only 4.2% of the total.

  6. Is Lululemon's Chief Product Officer to Blame For Sheer Debacle?

    Lululemon announced April 3 that Chief Product Officer Sheree Waterson was leaving the company as of April 15. Assigning blame might appease the board, but it shouldn't do anything for investors.

  7. Schulze Plus Joly Equals Success?

    Best Buy founder Richard Schulze announced March 25 that he was dropping his bid for the company and rejoining the board as Chairman Emeritus. Two other former board members are rejoining as ...

  8. Is it Time To See Through Lululemon?

    Lululemon has pulled 17% of its women's bottoms due to a quality problem. It turns out that its latest batch of black luon yoga pants, which combine Lycra spandex with nylon, were virtually see ...

  9. These Companies Could Buy Back Up To 40% Of Their Own Stock

    It's usually a great sign when companies buyback their own stock, and these companies are ripe for just that.

  10. How Companies Can Attract Top Female Employees

    Companies need to make an effort to learn how to attract and retain female employees in order to achieve a greater gender balance in the workplace.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center