When a company announces a bonus share, a right issue or a cash dividend, it also announces a book-close date: the day its register of shareholders is frozen to decide who is entitled. The date an investor has to watch, though, is not the book-close date itself — it is the last day on which buying still qualifies.
Why the last day to buy comes earlier
NEPSE settles trades on T+2: shares bought today reach the buyer's demat account two trading days later. A purchase only counts for an entitlement once it has settled into the register. So the last day to buy — the cum-date — is two trading sessions before the book-close date.
Count trading sessions, not calendar days. Public holidays and the days the market is closed are skipped, so the cum-date can fall several calendar days before the book close.
The ex-date and the price adjustment
The first session after the cum-date is the ex-date. A buyer from then on no longer receives the entitlement, so the price is adjusted to take it out.
After a bonus issue
Adjusted price = price on the cum-date ÷ (1 + bonus %)
A share closing at Rs 660 on the cum-date with a 10% bonus opens its ex-date adjusted to 660 ÷ 1.10 = Rs 600. An investor with 100 shares held Rs 66,000 before and holds 110 shares × Rs 600 = Rs 66,000 after: the bonus changes the number of shares, not the value.
After a right issue
Adjusted price = (price on the cum-date + right ratio × issue price) ÷ (1 + right ratio)
For a 1:1 right issue (a ratio of 1) at Rs 100 on a share closing at Rs 500: (500 + 1 × 100) ÷ 2 = Rs 300. For a 50% right issue at the same price: (500 + 0.5 × 100) ÷ 1.5 = Rs 366.67.
What to check before buying for an entitlement
- The book-close date and the last cum-date worked out from it.
- Whether the price already reflects the entitlement — a run-up before book close is common, and the ex-date adjustment removes the entitlement's value from the price.
- For a right issue, whether you intend to subscribe: an unsubscribed right is value given up.
- Tax: a cash dividend is paid net of tax deducted at source, at the rate in force.
Portexa's Book Close Dates list shows each upcoming book close with its purpose, and Price Adjustments shows the price before and after each ex-date. The Market Guide walks through the process step by step.