What is Record Date?

4 mins read
by Angel One
Uncover what is record date in share market. Understand its importance and explore record date examples to gain valuable insights into effective investment strategies, enhancing your potential for financial growth.

Every investor approaches investing with specific goals in mind. Some seek regular income, while others are saving for retirement. When considering the stock market, dividend investing is a popular strategy for long-term growth. However, timing your investments poorly can lead to unexpected tax consequences. To avoid this, it’s crucial to understand the concept of the record date before making any investment decisions.

In this article, we’ll explain what is record date in share market, discuss its importance, and provide you with examples to help you make the right investment choices.

What Is Record Date? 

The record date, also called the cut-off date, is essential in determining who gets dividends from a company. It is fixed by the board of directors and signifies when ownership of shares is officially recognised. Given that shareholding in the stock market is highly dynamic, a record date represents shareholders at a particular time.

On the record date, investors listed in the company’s shareholder record are entitled to receive dividends or any other distributions declared by the company, such as bonus shares or stock splits. These investors meet the company’s criteria for participating in profit distributions. It’s important to note that investors who purchase shares after the record date will not be eligible for the specific dividend distribution allocated on that date.

Read More About the Difference Between Dividend Date and Record Date

What Is The Importance Of Record Date? 

The record date holds immense importance due to its relation to other critical dates essential for dividend distribution, such as the ex-dividend date. This latter date signifies the deadline by which investors must purchase a stock to qualify for receiving dividends, as per exchange regulations.

Interestingly, although the ex-dividend date precedes the record date, it’s the board of directors who determine the record date initially. Once the ex-dividend date passes, buyers of a stock become ineligible to receive dividends.

This date is consistently set one business day before the record date, aligning with the T+2 trade settlement method widely used in North America. Under this system, if an investor buys shares one business day before the record date, the trade settlement occurs after the record date, resulting in no dividend entitlement.

Exceptions to this rule may apply if the dividend value exceeds 25% of the total share value, although such instances are rare. Consequently, the ex-dividend date assumes heightened significance in stock transactions, as the record date primarily serves as an official reference for the company’s management to compile the list of entitled shareholders for the latest dividend announcement.

What Are The Examples Of Record Date?

Consider a scenario where a company declares dividends to be paid on October 1. The record date is set for September 15, with the ex-dividend date falling on September 14. To qualify for receiving dividends, investors must acquire the company’s stock before September 14.

Suppose you purchased shares on September 13. Your trade will be settled on September 15, aligning with the record date, thus making you eligible to receive the announced dividends. Conversely, if you bought shares on September 14 (after the ex-dividend date), your trade settlement would occur on September 16, post the record date, rendering you ineligible for any dividend benefits.

So, investors need to keep track of record dates and ex-dividend dates announced by companies before making investment decisions.

What To Consider When Trading Stocks Around Record Date?

When trading stocks around the record date, it’s crucial to understand who qualifies to receive the dividend for the purchased stocks. If your goal is to secure dividends within the current cycle, it’s wise to buy stocks before the company’s designated record date. This ensures that you’re recognised as a shareholder entitled to dividends.

Conversely, if receiving the current cycle’s dividend isn’t your top priority and you’re more concerned about favourable stock prices, you can still purchase stocks after the record date. However, in this scenario, despite owning the stocks, the seller from whom you acquired them will receive the dividend.


In conclusion, the record date is crucial for determining dividend eligibility among shareholders. Being mindful of this date empowers investors to strategically time their stock purchases strategically, optimising their potential for earning dividends. Whether pursuing short-term gains or long-term investment objectives, recognising the significance of the record date enables investors to navigate the stock market with clarity and confidence, making sound financial decisions aligned with their goals and aspirations.


What does the record date signify?

The “record date” also called as “date of record”, is when a company sets up its list of shareholders who can be entitled to dividends or distributions.

How does the record date differ from the ex-eff date?

The ex-date, or ex-dividend date, is the trading day when the dividend is not owed to a new buyer of the stock. It precedes the record date by one business day. On the record date, the company identifies its shareholders.

Can I still receive dividends if I sell on the record date?

Yes, dividends can still be received if you sell your shares on the record date. The shares remain in your Demat account on the record date, and the transaction takes two business days to settle.

Is it possible to purchase stock on the record date?

Buying shares on the record date does not qualify an investor to receive dividends. To receive dividend benefits, shares must be purchased at least two business days before the record date.

Who is considered the holder of the record date?

The holder of the record date refers to individuals or entities recorded in a company’s stock ledgers and designated to receive dividends.