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 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. Investing

    When you buy a stock in a company, does it necessarily mean that one of the shareholders is selling ...

    There are two main markets where securities are transacted: primary and secondary. When stocks are first issued and sold by companies to the public, this is called an initial public offering ...
  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. 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.
  7. Technical Indicators

    What are the signs of a bear market rally?

    Read about some of the signs of a bear market rally, an unpredictable bull movement that takes place in the middle of a stronger downtrend.
  8. Fundamental Analysis

    Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger market exchanges.
  9. Forex Education

    What's the difference between bid-ask spread and bid-ask bounce?

    Understand the difference between the bid-ask spread that determines the buy or sell price for a stock and a bid-ask bounce, a situational price volatility.
  10. Options & Futures

    How do you trade put options on E*TRADE?

    Learn all about put option trading at E*TRADE. Explore margin accounts and become familiar with the different types of option writing.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center