an open offer is a secondary market offering similar to a rights issue in an open offer a shareholder is allowed to purchase stock at a price that is lower than the current market price the purpose of such an offer is to raise cash for the company efficiently 
understanding open offeran open offer differs from a rights issue offering in that investors are unable to sell the rights that come with their purchases to other parties in a traditional rights issue the trading of transferable rights connected with shares occurs on the exchange that currently lists the issuer s common stock e g nyse or nasdaq these can also be listed over the counter otc some investors see a secondary market offering as a harbinger of bad news as it causes stock dilution also the open offer could signal that the company stock is currently overvalued in both a rights issue and open offer a company allows existing shareholders to purchase additional shares directly from the company in proportion to what they currently own this is to prevent dilution to existing shareholders given the lack of dilution in contrast with traditional equity issues and secondary offerings such an issue does not require shareholder approval this is if the issue is less than 20 of the total shares outstanding similarities between a rights issue and an open offerboth a rights issue and open offer opportunity generally last for a fixed time period often 16 30 days this begins on the day the issuer s registration statement for the rights offering becomes effective no federal securities laws mandate a specific time period for a rights issue however with both rights issues and open offers if an investor lets the time period for the opportunity expire she will not receive any cash while rights issues are often also priced at a subscription below the current market price as with an open offer these rights are transferable to external investors other types of traditional rights issues include a direct rights issue and insured rights offering also called a standby rights offering to prepare for any rights offering an issuer must provide official documentation to shareholders along with marketing materials the issuer must obtain the exercise certificates and payment from shareholders and file the required securities and exchange commission sec and exchange documentation these are key steps but not a comprehensive set as all issues differ 