What is book closure?
Book closure usually describes the point at which new shareholders will not receive the next dividend payment on the shares concerned, because they have missed the book-closure date. The expression can be used more broadly to describe the point in time that decides which investors will and will not benefit from some future action.
Where have you heard about book closure?
As an investor, you may have heard of book closure in relation to the desirability or otherwise of buying a share in the light of entitlement to future dividends. Your financial adviser may have mentioned book closure, as may the financial media.
What you need to know about book closure.
Book closure refers to a date that divides those entitled to benefit from some future action from those who are not. Usually, this means the cut-off point beyond which a stock goes 'ex dividend', meaning that new buyers will not be entitled to the next scheduled dividend pay-out. Because of this, the market price of a stock tends to rise as book closure draws near and dips once the book-closure point has passed. By definition, the cycle of dividend declaration by the company resumes, meaning another book-closure point will be set sometime in the future, with the same likely effect on the share price, up and down.
Find out more about book closure.
Book closure usually refers to the entitlement or not to shareholders' dividends. Learn more about dividends here.