Understanding Ex-Rights Stock: A Guide for Investors

If you are involved in the stock market, you might come across ex-rights stock at some point. Here are the basics of ex-rights stock and what it means to you as an investor.

Shareholder Rights

When you invest in common stock, you are going to have certain shareholder rights associated with your stock purchase. You will be able to vote on important matters regarding the company, such as voting for a board of directors. You will also have a claim to a portion of the assets of the company. If the company issues a dividend, you will be entitled to receive a dividend payment.

Ex-Rights Stock

If you have ex-rights stock, you are essentially trading stock that does not have any of these shareholder rights. The rights could have expired, or they could have been transferred to another individual. Regardless of the reason behind losing your rights, they are gone and you cannot get them back. In some cases, the owner of a stock can actually sell her shareholder rights without selling the stock itself. When this happens, the stock is going to be worth less than a share of stock that still has its shareholder rights attached.