A corporate action is anything a company does that mechanically affects its shares: paying a dividend, issuing bonus shares, splitting the stock, a rights issue, a buyback, a merger.
They are not market events. Nobody is buying or selling. The company is doing something to the shares themselves.
The two dates
Record date. The date on which the company looks at its register of shareholders. Whoever is on that list gets the benefit. Simple.
Ex-date. The first day the share trades without the entitlement. "Ex" means "without".
The ex-date is the one you act on. It is the deadline that matters for a buyer.
Why two dates exist
Because settlement takes time. Under T+1, a share bought today is credited to your demat account tomorrow, and only then does your name reach the company's register.
So the exchange sets the ex-date such that anyone buying on or after the ex-date will not be on the register by the record date. Under a T+1 cycle the ex-date and record date fall on consecutive trading days.
The timeline
A company declares a ₹10 dividend. Ex-date Thursday, record date Friday.
Buy on Wednesday → the trade settles Thursday, you are on the register by Friday → you receive ₹10 per share.
Buy on Thursday (the ex-date) → settles Friday, too late for the register → you do not receive the dividend. The person who sold to you does.
Sell on Wednesday → you are not a holder on the record date → you do not receive it.
Sell on Thursday → you held through the ex-date, so you still receive the dividend, even though you no longer own the share.
That last case surprises people. It is correct. Entitlement is fixed at the ex-date, not by whether you still hold the share later.
Why the price falls on the ex-date
On the ex-date, the share price typically drops by roughly the amount of the dividend. The exchange also adjusts the previous close used as the reference for price bands.
This is not a loss and not a market reaction. It is arithmetic.
Share price ₹500. Dividend ₹10.
Before the ex-date: you own a share worth ₹500, which includes the ₹10 the company is about to pay out.
On the ex-date: the company is committed to sending ₹10 per share out of the door. The share now represents the company minus that cash, so it opens around ₹490.
Your position: ₹490 of share + ₹10 of dividend (arriving shortly) = ₹500. Exactly where you started.
Other dates you may see
- Announcement / board meeting date — when the company declares the action. The price can move here, because this is genuine new information.
- Payment date — when the dividend actually reaches your bank account, typically within about a month of declaration.
- Book closure — a period during which the register is closed for updates; functionally similar to a record date.
Where to find these dates
- NSE: Corporate Filings → Corporate Actions
- BSE: Corporates → Corporate Actions
- The company's investor relations page
- Your broker's app, usually on the stock's page
Key takeaways
- Record date fixes who is on the register; ex-date is the first day the share trades without the entitlement.
- To receive any corporate action, you must buy before the ex-date.
- If you sell on or after the ex-date, you still receive the entitlement.
- The price drop on the ex-date is arithmetic, not a loss — value moves from share price into cash.
- An unexplained overnight price drop is very often a corporate action, not bad news.
Check your understanding
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