A subscription right is the right existing shareholders receive in a rights issue to subscribe for new shares in proportion to their holding. The rights can sometimes be sold on.
Owners who use their subscription rights avoid dilution. A subscription right differs from a warrant, which is a separate security with a longer term.
A rights issue is a new share issue in which existing owners have priority to subscribe for new shares.
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A pre-emptive right means existing shareholders may subscribe for new shares in proportion to their holding.
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A warrant gives the right to subscribe for new shares in a company at a set price.
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Dilution means existing owners' stake in the company decreases when new shares are issued.
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