3.2.1.1.5. Other Rights
Other rights of common stockholders include the right to sell or transfer their shares in the public market at will. Once a stock has been issued and purchased in the primary market, it may be freely traded in the secondary market. Here, stocks may be bought and sold at auction on an exchange, such as the New York Stock Exchange, or they may be bought and sold at negotiated prices in the over-the-counter market.
If the corporation happens to offer an additional issue of common stock, stockholders may have the right to maintain their current share of ownership by purchasing a proportionate amount of the new issue before it is offered to the public. This is a stockholder’s pre-emptive right. In order to meet this obligation to existing shareholders, companies carry out a rights offering in which the current shareholders are offered enough new stock to keep their proportionate ownership. This rights offering further entitles stockholders to buy these proportionate shares at a discount from the offering price. Moreover, the rights themselve