When a company plans to offer new shares of stock to the public, sometimes they will issue a rights offering.
A rights offering gives existing shareholders an opportunity to purchase shares of the new stocks at a discounted price before those shares are offered to the rest of the public. Rights have an expiration date and are issued for a short time only.
Companies use Rights Issues to raise capital for different purposes such as - growth strategies, to pay off debts and to fund acquisitions and others.
Investors who are not shareholders can buy such rights on the market.
