ex-rights
Ex Rights means a share is trading without the attached right to buy new shares at a discount in a company's rights issue.
In plain English
"Bros, I checked my portfolio and that GTCO rights offer nko, has it disappeared? I thought I was entitled to buy more shares cheap." "You still are, but the deadline has passed. The stock is trading ex rights now, so anyone buying it today doesn't get that entitlement anymore."
That short exchange captures the whole idea. When a Nigerian company wants to raise fresh capital, it sometimes offers existing shareholders the chance to buy new shares at a discounted price, in proportion to what they already hold. This is called a rights issue. Before a certain date, the share carries that privilege along with it, so if you buy the share, you buy the right too. This period is called cum rights.
But every rights issue has a cut off point. Once that date passes, the share starts trading ex rights, meaning without rights attached. If you buy the share after this date, you are simply buying the share as it is. The right to subscribe to new shares at the discount stays with whoever owned the share before the cut off, not with you.
This matters because the share price usually adjusts downward once it goes ex rights, since new buyers are no longer getting that bonus entitlement bundled in. So do not panic if you see a stock drop a bit on the ex rights date. It is not necessarily bad news, it is just the market pricing out a perk that no longer comes with a fresh purchase.
For someone in London sending money home to buy Nigerian shares through a local stockbroker, timing matters here. Buying a stock two days before it goes ex rights versus two days after can mean the difference between qualifying for a discounted allotment and missing it entirely.
Dangote Cement announces a rights issue at ₦210 per new share, while the market price is ₦280. Adaeze owns shares before the qualification date, so she is entitled to buy more at ₦210. Tunde buys the same shares a week later, after the stock has gone ex rights, and he does not get that entitlement, he simply pays the market price for existing shares.
Questions people ask
Why does a share price often fall on the ex rights date?
Because the price is adjusted to reflect that the entitlement to buy discounted new shares no longer travels with the share. It is a technical adjustment, not a sign that the company is in trouble.
If I sell my shares just before the ex rights date, do I lose the entitlement?
Yes. The right to subscribe belongs to whoever holds the shares on the qualification date recorded by the registrar, so if you sell before that date, the buyer gets the entitlement, not you.
Can I still buy the new discounted shares if I missed the rights issue window?
Generally no, once the offer closes you cannot apply directly, though some rights issues allow trading of the rights themselves on the exchange before they expire, so it is worth checking with your broker.
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