Nil-paid rights

Nil-paid rights arise when a firm sells new shares for cash to existing shareholders via a rights issue. So, for example, a firm might offer one new share priced at, say, £1 for every four currently held. That’s called a ‘one for four’ issue. Let’s say the current share price is £2.50. So after the new share has been issued you would expect the firm’s shares to trade at around £2.20 (4 x £2.50 = £10. And (£10 + £1)/5 is £2.20). That’s called the ex-rights price.

Any shareholder can choose not to take up their rights, in which case they can often be sold. The ‘nil-paid’ price is the difference between the issue price and the expected ex-rights price. Here that’s £2.20 – £1 = £1.20. Another investor who was not invited to participate in the original rights issue might be interested in paying for nil-paid rights instead.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12