Book Closure

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DEFINITION of 'Book Closure'

The time period when a company will not handle adjustments to the register, or requests to transfer shares. The book closure date is often used to identify the cut-off date determining which investors of record will be sent a given dividend payment. The stock of publicly-traded companies changes hands daily as investors buy and sell shares. Due to this, when a company declares it will pay a dividend, it must set a specific date when the company will "close" its shareholder record book and commit to send the dividend to all investors holding shares as of that date.

BREAKING DOWN 'Book Closure'

A company will declare a "book closure" to signify a date. Records are still kept during this period but the beginning date, or book closure date, is important for determining who will be affected by some future change, for example it helps determine who gets the dividend. A stock which pays a dividend often increases in price by the amount of the dividend as the book closure date approaches. Due to the logistics of processing the large number of payments, the dividend may not actually be paid until a few days later. After the book closure date, the price of the stock usually drops by the amount of the dividend, since buyers after this date are no longer entitled to the dividend.

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