Series 65: 2.4.2. Subscription Rights

2.4.2. Subscription Rights

A subscription right is similar to a warrant but has a shorter life, usually lasting two to four weeks. Essentially, subscription rights originate when a company decides to raise additional money by offering additional shares of an existing stock to the public. This is called a follow-on offering.

When a follow-on offering occurs, current shareholders often have a preemptive right to maintain their proportionate ownership share in a stock. The company will usually fulfill this right through a rights offering. During a rights offering, each shareholder is given one right for each share owned. The company wi