What Does Record Date And Ex-Date mean? How To Find Ex-Date?

 Hi Friends,

Many times, we hear about different corporate actions such as dividends, bonus issues, and stock splits. To participate in corporate actions, investors should be aware of different dates to make sure that they are eligible for corporate action. 

Investors get confused with the below queries in the mind

• When you will get dividends or bonus shares or split shares?
• Are you eligible for corporate action?
• When do dividends, bonus shares, or split shares get credited into the account?

To clarify the above queries, you need to understand the different dates for the corporate action. Let's see important dates and what they meant for you.

1. Announcement date
• It is the date of approval of corporate action such as dividend, bonus issue, or stock split.
• It is approved by the board of director
2. Record date
• It is the cut-off date finalized by the board of directors to determine the list of eligible shareholders.
• On this date, an investor should own the share.
• Shareholders whose names are on the register on the record date will be eligible for corporate action.
3. Ex-date
• It is working one day prior to the record date. 
• On this day, the share price gets adjusted as per corporate action. If the dividend paid is 5Rs, then the share price = trading price - dividend amount
• Investors who want to participate in a corporate action, they need to buy shares before the ex-date.
• In India, we follow the T+2 trading cycle. So it is mandatory to buy shares before the ex-date to make sure you own shares on the record date.
4. Payment date
• It is the date before which you will receive dividends.
• Generally, the payment date will be within 30 days.
5. Shares credit date
• Extra shares will be credited into eligible shareholder's accounts within 15 days from the record date in case of a bonus issue o stock split.
• This depends upon RTA (Register and transfer agents)

Let's understand this with a simple example. A company with the name XYZ wants to do a stock split. It announces the stock split in the board of directors meeting and mentions that the company XYZ is undergoing a stock split in the ratio of 5:1 and the record date for the stock split is 6 June 2022.

If investors want to participate in the stock split, they should be on the company's register on the record date. That means they should be owners of the share on the record date. Ex-date for the stock split is one day prior to the record date. If you carefully see, the record date falls on Monday. In this case, Ex-date is 3 June 2022 which is the prior working day before the record date. Investors need to buy shares before 3 June 2022 to be eligible for a stock split as we follow the T+2 trading cycle. If any holiday falls before the ex-date, then investors need to buy the previous working day to make sure that they own shares on the record date.

Stay Tuned☺

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