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Record Date

The record date is the cutoff date established by a company to determine which shareholders are eligible to receive dividends, vote at shareholder meetings, or participate in corporate actions such as stock splits or mergers. Only those who are listed as shareholders in the company's records on the record date are entitled to these benefits. The record date is important because it ensures that shareholders are properly identified, and it allows companies to administer shareholder benefits accurately.

Example

A company declares a dividend on January 1, with a record date of January 10. Shareholders who own shares as of the close of trading on January 10 will be eligible to receive the dividend payment.

Key points

• The cutoff date to determine eligible shareholders for dividends or corporate actions.

• Shareholders listed on the company’s records as of the record date are entitled to benefits.

• Ensures proper identification and administration of shareholder rights.

Quick Answers to Curious Questions

It determines which shareholders are entitled to receive the dividend based on their ownership on the specified date.

You would not be eligible to receive the dividend or participate in the corporate action tied to that specific record date.

The ex-dividend date typically occurs two business days before the record date, and investors who buy shares on or after this date are not entitled to the upcoming dividend.