Share Purchase Right
What It Is:
A share purchase right is an instrument that entitles the holder to purchase a specified number of shares at a specified price.
How It Works/Example:
Offered by an issuing company, a share purchase right gives current shareholders the opportunity to purchase a specific quantity of shares at a favorable discount without obligation. For instance, a share purchase right might offer a current holder 10 additional shares for $500 ($50 per share) rather than the current market price of $70 per share.
Why It Matters:
In order to take advantage of the special price, a holder must receive a share purchase issue and must pay accordingly for the shares in order to receive them.
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Cached on May 24, 2012, 11:06 am