What is the essential characteristic of a rights offering?

The essential characteristic of a rights offering is that it allows existing shareholders to purchase new shares at a discount. This mechanism is designed to give current shareholders the opportunity to maintain their ownership percentage in the company while new shares are issued. By providing shares at a lower price than the market value, the rights offering incentivizes existing shareholders to buy into the company and helps to prevent dilution of their ownership stake.

This approach is beneficial for both the company and the shareholders. The company raises capital while offering favorable terms to its current shareholders, thus fostering loyalty and investment in the business. The discount encourages participation, ensuring that shareholders feel they are gaining value in return for their investment.

The other options do not capture the core feature of a rights offering. For instance, reallocating shares among shareholders does not address the new share issuance aspect, the selling of voting rights is unrelated to the financial mechanics of a rights offering, and providing a guaranteed return does not align with the speculative nature of stock ownership. These distinctions clarify why the correct answer centers on the value proposition of discounted share purchases for existing investors.