DEFINITION of 'Nil-Paid'

Security that is tradeable but originally posed no cost to the seller. For example, a renounceable right being sold by the original owner to another investor is considered nil-paid. A right is an opportunity to purchase more shares, usually at discount, given to shareholders by a corporation. The shareholders receive these rights at no cost, and if the rights are renounceable, the shareholders can choose to sell them on the market.


Though the word "nil-paid" may suggest that nil-paid rights give shareholders the right to acquire new shares for no cost, this is not the case. Nil-paid rights are only the right to acquire more shares at the current share price or a discount. The corporation issuing the rights to its shareholders does not receive payment for the rights, but if the shareholders decide to exercise the rights, they must pay for the securities they are given the right to buy.

  1. Non-Renounceable Rights

    An offer issued by a corporation to shareholders to purchase ...
  2. Rights Offering

    An issue of rights to a company's existing shareholders that ...
  3. Cum Rights

    A shareholder of record that qualifies for a rights offering ...
  4. XRT

    A notation on a ticker tape that is used to indicate that a security ...
  5. Rights

    A security giving stockholders entitlement to purchase new shares ...
  6. Ex-Rights

    Shares of stock that are trading but no longer have rights attached ...
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