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What is a Fractional Share Right (FSR)?

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EasyEquities allows you to invest in a portion of a share, while still getting the benefits of being a shareholder. This is called Fractional Share Investing and we’re the only one’s who offer it in South Africa. Even though a share’s price might be, say R1000, you’re able to invest in and own R100 of that share. Because of Fractional Share Rights, even if you don’t have the amount needed to invest in one whole share, it doesn't mean that you can’t invest in it at all. 

The concept of fractional investing applies to all of your EasyEquities accounts and currencies.  

Here's a quick explainer video on FSRs:


Example

Joe is an investor who wants to buy shares in Naspers. 

Joe checks the Naspers share price, but realizes he only has R500 to invest with. Though this amount is not enough to invest in a whole Naspers share, Joe is able to invest in R500 worth of a Naspers share. Over time, if Joe is able to continue investing snall amounts into Naspers, he will eventually end up owning a whole Naspers share. The price of a share therefor does not depict whether you are able to invest in it or not. 

Do I receive dividends for the fractional share rights? 

Yes. Dividends are paid out on whole shares as well as the Fractional Share Rights of that share. 

The dividend paid out on fractional share rights will be the dividend per share issued by the company in proportion to your fractional holding.

How are Fractional Share Rights held on the EasyEquities platform?  

When an EasyEquities client invests in a fraction of a share (Fractional Share Right), First World Trader (Pty) Ltd (a sister company under our Purple Group Limited holding company) acts as a principal to a contract for difference (CFD) issued to the investor. 

This CFD gives the investor a contractual claim against First World Trader to the economic benefits and risks associated with share ownership (price movements and dividends) without having ownership rights in the underlying share. 

If over time, an investor enters into enough CFD Transactions with the same underlying share so that he/she acquires rights to 100% of a share, then the CFD Transactions will be closed out, and a whole share will be delivered to you 

Unlike whole shares Fractional Share Rights (FSRs) do not carry any voting rights. 

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