Corporate actions like dividend payments, stock splits, right issues or bonus issues are all declared by the listed companies with a specified date. These dates are called ex-date and record date that you should know if you hold shares of listed companies.
Shareholders usually get confused between these two dates, as these dates define the entitlement of getting the benefit from corporate actions like dividend payouts. One of these dates is important, if you sell shares before this date, you will not be eligible to receive dividend or other benefits. Let’s talk about these dates, how to check and how it affects share prices.
What is Ex-Date in Share Market?
This is the date, on or after which if someone buys a share of the company he or she will not be eligible to get the benefit of corporate action like dividend payout. This is the date on which the stock starts being traded without any benefit of corporate actions to shareholders.
Usually, when you buy shares, as per the T+2 trading cycle period, you will have shares in your demat account after 2 days of purchase. If on ex-date you will buy the shares of a company to get the benefit of dividend, then it would be not possible, as on this date you do not hold shares.
However, now various well-known shares are settled with the T+1 cycle but still, you would be not eligible to get dividends if you buy shares on ex-date. Therefore, there is another date called “record date” also announced by the company along with corporate announcement date.
What is the Record Date in the Stock Market?
This is the date the company checks the record, if your name is registered in the name of shareholders, then only you will be entitled to get the benefit of dividends or other corporate actions like rights issues, bonus shares or stock splits.
Unusually, ex-date and record-date both are kept on the same date, hence if you purchase shares of a company on the records date you would not be entitled to get the benefit of such corporate actions. While checking the eligibility for dividends always check this date (record date), and hold your shares till that date to get the dividends in your account.
Difference Between Ex-date and Record Date?
The ex-date is the date on which or after that, if you buy the shares of the company you would be obviously not entitled to get the benefit of dividends or other corporate actions. This date is determined while considering the T+2 settlement cycle, but if you buy a share and get into your account, it is also not necessary for you would be eligible to get such benefits.
The record date is the crucial date, till date, if your name is registered in the records (registrar) of the company, then only you would be qualified to get the dividends or other benefits. If you want to get the benefit of such corporate actions, buy the shares at least two days before the ex-date so that you get the ownership of shares into your demat account before the record date.
How is the Record date determined?
The record date is determined by the company to check the name of shareholders holding the share of their company till that date. The company can decide any date as a record date as per their corporate actions. And for paying the date, the dividend record date is usually decided after the company declares the quarterly results.
For other types of corporate actions like bonus issues, right issues or stock splits, the record date is determined as per the approval of the board meetings and rules of the stock exchange. However, the company can announce the record date and ex-date on the day of announcing such corporate actions or can also announce both of these dates on the same day.
Ex-Dividend Date vs Record Date Example
If the record date or ex-date for a corporate action is Thursday, then to become eligible to avail the benefit of such corporate actions, you need to buy the shares before Wednesday. The stock traded with corporate action will be effective from Thursday. Hence, if you buy shares on Thursday you will not be entitled to get the benefit of corporate action.
Suppose, a company has announced a dividend of Rs 20 per share on 10th Feb 2025 with the record date of 05 March 2025 for the same, then, 10th Feb 2025 is considered as the dividend declaration date and 02 March 2025 will be considered the ex-date. The ex-date falls is two days before the record date and in this case, the record date is 05 March 2025.
If you have bought the shares of this company before the ex-date which is 02 March 2025, then you will be able to get a dividend in your account. If you buy the share after this ex-date, you will not be eligible to get the dividends, as your name will be not in the shareholders record list of the company till the record date which is 05 March 2025.
How to Find Dividend Ex-date or Record date?
Usually, when you hold the shares of any company you get the notification of such corporate actions on your email or other means of communication through your broker. When such corporate actions are announced by the company, a copy of the same document is also submitted at all the stock exchanges where the shares of the company are listed.
However, if you don’t receive such notification in your email or through other sources of communication you can find the details of such important dates on stock exchanges. You have to just visit the website of NSE India or BSE and find the corporate section, where you can find the details of such actions with ex-date and record dates.
Apart from this if you want to check the ex-date and record date of any particular stock, you can search the shares with a stock symbol on the website of the stock exchange. When you get the summary of share trading, there you can also find a section on corporate actions.
You can navigate this section to find the ex-date and record date of dividends or all past and upcoming corporate actions that are declared by the company. You can also download the original copy of the document from here that is released by the company at the time of the announcement.
How Does Ex-dividend Date Affect Stock Price?
Usually, after the announcement of the dividend by the company, the share price of the company discounts the value of the dividend before the ex-date. However, if the amount of the dividend is significantly much smaller in terms of percentage, then there is no major impact on the share price, but a high amount affects the share price as it also carries the value of the dividend.
Suppose, the company has announced a dividend of 10% on the par value of stocks, then the market price of the share also rises by 10%. However, on the ex-dividend date, the stock price drops by an amount corresponding to the dividend value or rate. As the stock price loses the value of the dividend it was carrying up to that point, it begins trading ex-dividend.
Conclusion
Ex-date is two days ahead of the record date, if your name is registered as a shareholder of the company till the record date, then you will be eligible to get the benefits of various corporate actions like dividend pay-outs, stock split, bonus or right issue. If you buy the shares of a company before the ex-date then only you will be eligible to get such benefits.
Ex-date is two days ahead of the record date, as T+2 settlement cycle is considered while announcing such corporate actions. You can check the ex-date or record-date on the website of stock exchanges. The share price of companies gets affected after the announcement of dividends and ex-date if the dividend amount is significant.
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