The record date is the day the company checks its shareholder register to decide who gets a corporate action, such as a dividend or bonus. The ex-date is the first trading day on which buying the share no longer earns you that entitlement, so to be eligible, you must buy before the ex-date.
Why are there two dates at all?
Because buying a share and legally owning it are not the same moment. When you buy shares on an exchange, they arrive in your demat account only after settlement, in India, equity trades settle on a T+1 basis, meaning one working day after the trade. (If settlement is new to you, start with what is settlement. Stock vs cash.)
The company can only see who owns its shares through the depository records, and those records reflect settled trades. So the exchange works backwards from the record date and announces an ex-date: the first day on which a purchase settles too late to make it onto the register.
Under T+1 settlement, the ex-date and the record date generally fall on the same trading day. A trade done one day before the record date settles on the record date itself, just in time. A trade done on the record date settles the next day, too late.
Kavita's two scenarios
Sundar Textiles announces a dividend of ₹5 per share, with the record date (and therefore ex-date) on Friday.
Scenario 1. Kavita buys one day before the ex-date. She buys 100 shares on Thursday. Her trade settles on Friday, the shares reach her demat account on the record date, and her name is on the register. She receives ₹500.
Scenario 2. Kavita buys on the ex-date. She buys the same 100 shares on Friday morning instead. The stock is already trading "ex-dividend", and her trade settles on Monday, after the register was checked. She gets no dividend. The seller who held the shares into Friday keeps the entitlement.
Notice that in scenario 2 Kavita isn't cheated: on the ex-date the share price typically opens lower by roughly the dividend amount, so she also paid less per share. The dates only decide who receives the payout, not who "wins".
| Buys Thursday (before ex-date) | Buys Friday (ex-date) | |
|---|---|---|
| Trade settles | Friday (record date) | Monday |
| On register on record date? | Yes | No |
| Gets the ₹5 dividend? | Yes, ₹500 | No |
Does this apply to every corporate action?
Yes. Dividends, bonus issues, stock splits, rights issues and tender-offer buybacks all use a record date, and the same before-the-ex-date logic decides eligibility. For example, what are dividends, and how do I receive them and what is a bonus issue both hinge on these dates. In the Rupeezy app, stocks with an upcoming event carry a marker. See what the event tag next to a stock indicates, so you can spot the dates before you trade.
Things to keep in mind
- The working rule: to be eligible, own the shares before the ex-date. Buying on the ex-date itself is too late.
- Weekends and market holidays sit between trade and settlement dates too, so always check the announced ex-date rather than counting days yourself.
- Selling on or after the ex-date does not cost you the entitlement. You were on the register, so the dividend or bonus is still yours.
- The price adjusts on the ex-date, so there is no free profit in buying just for the entitlement and selling right after.
Read next
What are dividends, and how do I receive them? — The most common corporate action, and how the money reaches you.