What is a Share Purchase Right?

A share purchase right is an instrument that entitles the holder to purchase a specified number of shares at a specified price.

How Does a Share Purchase Right Work?

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 Does a Share Purchase Right Matter?

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.