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. Non-Renounceable Rights

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

    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 ...
RELATED FAQS
  1. When you buy a stock in a company, does it necessarily mean that one of the shareholders ...

    There are two main markets where securities are transacted: primary and secondary. When stocks are first issued and sold ... Read Full Answer >>
Related Articles
  1. Retirement

    To Sell Or Not To Sell

    Learn some tips on how to exit a position to the best of your advantage.
  2. Active Trading Fundamentals

    Trade On Support For The Best Exit Strategy

    Find your sound exit strategy based on support and resistance levels, while understanding the psychology behind them.
  3. Active Trading

    Connecting Crashes, Corrections And Capitulation

    Even though crashes, corrections and capitulations are bad news for investors holding the stock, there are still ways to profit.
  4. Options & Futures

    Understanding Rights Issues

    Not sure what to do if a company invites you to buy more shares at discount? Here are some of your options.
  5. Forex Education

    Learn To Invest In 10 Steps

    Want to invest but don't know where to start? Learn how to make your money work for you with these tips.
  6. Investing Basics

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  7. Investing

    Commercial Paper

    Commercial paper is a short-term debt security issued by financial companies and large corporations. The corporation promises the buyer a return, or profit, for making the loan. The return is ...
  8. Investing Basics

    Why Do Penny Stocks Fail?

    Penny stocks are speculative and highly risky investments. Lack of government and stock exchange oversight and general information leaves penny stock investors open to sudden losses.
  9. Active Trading

    What's a Marketable Security?

    Marketable securities are financial instruments that can be readily bought and sold in a public market. The key feature is the ease with which it can be sold and converted into cash. Usually, ...
  10. Stock Analysis

    Buyinb Facebook Stock, A Beginner's Guide

    This straightforward guide helps the novice investor feel more adept at buying a stock, such as Facebook (FB).

You May Also Like

Hot Definitions
  1. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  2. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  3. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  4. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  5. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  6. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
Trading Center