why companies offer non renounceable rights
by offering non renounceable rights the company is setting a narrow window of opportunity for shareholders to purchase stock at discount offering such rights can be seen as more favorable to the company than to existing shareholders despite a discount being offered if the shareholders do not have sufficient funds at the time the non renounceable rights are exercisable they may lose the opportunity to buy at the discount rate regardless of what action the existing shareholders take the company will proceed with issuing more stock a company might offer non renounceable rights on shares if there s a timeframe and capital objective the business needs to meet it may need to raise funds for an acquisition expand its operations through hiring or adding new locations paying back debts or any number of things the company might be facing bankruptcy if it doesn t address its capital circumstances if the company must raise capital to maintain its prospects as a going concern it might be necessary to issue shares regardless of the potential dilution to existing shares non renounceable rights are a way for the company to give existing shareholders the chance to maintain their stake in the business while controlling the leeway available to them to take advantage of the discounts for shareholders this can be seen as a less than desirable option than being offered rights they could conceivably sell on the market and see returns for themselves 