UK Rights Issue

Elliot's Avatar

Elliot

20 Dec, 2021 12:29 PM

Hi,

What's the best way to record a Rights Issue on a UK stock? E.g. a 2 for 5 Rights Issue at 120.0 pence per New Ordinary Share.

If you do this as a stock split, it doesn't reduce your book cost (as it should).

Thanks in advance.

  1. 1 Posted by Elliot on 22 Dec, 2021 08:58 AM

    Elliot's Avatar

    For anyone reading this in the future - the way I had to do this - and the best way I see to do this is:

    1) Create an entirely new security in Moneydance called "XXX Nil Paid", replacing XXX with whatever company it refers to. Set the price to whatever you please, but do not enter a ticker symbol. This stops any extensions like Quote Loader retrieving prices for this in future.

    2) Enter a BuyXfr transaction with the total number of Nil Paid shares. This should refer to the nil paid security rather than the actual company's security. This adds the nil paid shares to your account. The price for these should be the Theoretical Ex-Rights Price (TERP), or let Moneydance calculate this for you based on the number of shares and total cost of the nil paid shares. Do not be alarmed if the price is a very small amount compared to the company's share price - this is correct.

    3) Enter either a Buy or Sell transaction depending on what you did with your nil paid shares. Did you take up your rights to buy them, or did you sell them? Enter the number of shares and the price you paid for them. Set the security to the newly created Nil paid share security.

    4) Finally, you need to enter a transaction to alter the "book cost" for your original shares. This is relevant for CGT. Enter a BuyXfr or SellXfr (whatever direction you did in step 3). This now needs to refer to the original company's security, NOT the nil paid security. Leave the number of shares and price blank and enter the amount your book cost was increased or reduced by. In instances where you sold all nil paid shares, this number will be equal to the number in step 2.

    Hope this is helpful

  2. System closed this discussion on 23 Mar, 2022 09:00 AM.

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