Record date and ex date

Let me begin by saying a big thank you to all of you for writing in to me. I was really amazed at the number of emails that I got. Please keep all your comments and emails pouring in. Unfortunately its very difficult to reply to all them individually, but I sincerely appreciate all your comments and stock ideas. Some of them I must say are truly remarkable. It gives a lot of satisfaction to see people benefitting from what little understanding I have on the stock market. Hope you spread the word around so that I can have a larger audience and we could have a larger number of ideas. Please ask all your friends to subscribe to my blog. Your patronage is key to the success of this blog.

Now to some funda. A lot of my friends have a query about the record date and ex date. This is something even I dont understand fully. But based on my limited understanding I have tried to explain this by means of an example. Feel free to correct me if I am wrong.

Let us pick upon the example of Sterlite Technologies which has set the record date for bonus and split as 10th of March 2010.  Ex date has been set as 9th of March 2010. This means if you buy Sterlite Technologies shares on or before 8th March your name will be there in the share holders books of the company and you will get bonus shares as well as the split number of shares . Usually it takes 7 – 8 days for the bonus shares to get credited to your account. The person who buys Sterlite shares on or after 9th March will not be eligible for the bonus issue / split because the company would consider the entries in share holders books at the end of the day on Record Date.
On Ex-Date (9th March) when the market begins at 9 am the price of Sterlite will be around Rs 87.6 (closing price of 8th March i.e. Rs 438 divided by 5) and your will have 2.5 times the number of shares that you have. This is because the face value split has been set at Rs 2 from Rs 5. So 5/2 is the number of shares that you will have in your account. After a few more days the bonus shares will also be credited to your account in the ratio of 1 share for every share held.

As regards the price, once the price corrects to reflect the corporate benefit, it would be open for the market to discover the price.

So in summary this is what it means

Record Date: A day before Book Closure period is Record Date. Only the investors who are in the share transfer books of a company on the end of the day on Record Date is eligible for the corporate benefits.


Ex-Date: It is the date on which the corporate benefit is reflected in the share price. The investors who hold the securities just before this day are eligible for corporate benefits. The people who buy shares on or after this date are not eligible for the benefits.

If you wish to check the record and ex dates for any share you can look for the same under the CA tab on BSE and under the Corporate announcement link on NSE. This link is not visible on the home page (atleast I could not find it). It is visible once you enter the stock webpage.

Hope this clarifies. If, I am wrong do let me know. Your comments are really appreciated

And yes please spread the word around.

Till my next post.........Happy investing