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are also two other types of share issues an investor will
come across in trading shares, and they are bonus and rights
issues. A bonus issue is the issue of new ordinary shares
at no cost to existing shareholders but out of the company's
reserves and given in direct proportion to the number of shares
owned. Bonus issues are used to enlarge the capital base of
the company and may also be used as a means of rewarding its
existing shareholders. To be entitled to the bonus share,
take note of the Ex-Date as only shares bought before
the Ex-Date will be entitled to the bonus share.
The
period from the day of announcement of the entitlement of
bonus or rights issue or dividend to the day before the Ex-Date
is commonly referred to as the cum-period. Normally,
cum is a prefix meaning "with". A share that is
cum-dividend means the buyer is entitled to a dividend currently
attached to it. The same is true for cum-rights and cum-bonus. |