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Purchase right

Purchase right

A purchase right entitles a company's shareholders to buy existing shares in another company.

What is a purchase right?

A purchase right (Swedish: inköpsrätt) is a right given to the shareholders of one company to buy shares in another company, often a subsidiary, at a predetermined price. They are used, for example, in a spin-off. They resemble subscription rights, but concern shares that already exist.

 

Purchase rights and the share ledger

Since the shares already exist, this is a transfer of shares, not a share issue. When the right is exercised, the buyer must be entered as the new owner in the other company's share ledger.

Record a change of ownership
Henrik Kristensen, NVR
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Related terms

Spin-off

A spin-off means that part of a company, often a subsidiary, becomes an independent company of its own.

Subscription right

A subscription right is the right to subscribe for new shares in a rights issue.

Transfer of shares

A transfer of shares means shares change owner, for example through a sale, gift or inheritance.

Subsidiary

A subsidiary is a company controlled by another company, the parent company.