Nil-Paid

AAA

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.

INVESTOPEDIA EXPLAINS 'Nil-Paid'

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.

RELATED TERMS
  1. XRT

    A notation on a ticker tape that is used to indicate that a security ...
  2. Ex-Rights

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

    A security giving stockholders entitlement to purchase new shares ...
  4. Rights Offering (Issue)

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

    A shareholder of record that qualifies for a rights offering ...
  6. Non-Renounceable Rights

    An offer issued by a corporation to shareholders to purchase ...
Related Articles
  1. To Sell Or Not To Sell
    Retirement

    To Sell Or Not To Sell

  2. Trade On Support For The Best Exit Strategy
    Active Trading Fundamentals

    Trade On Support For The Best Exit Strategy

  3. Connecting Crashes, Corrections And ...
    Active Trading

    Connecting Crashes, Corrections And ...

  4. Understanding Rights Issues
    Options & Futures

    Understanding Rights Issues

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center