The record date is the cut-off the company’s board fixes to list the shareholders entitled to a dividend. The ex-dividend date is set by the stock exchanges, and on that day the share price is expected to fall by roughly the dividend amount.
What is a record date?
A dividend is a share of a company’s profit paid out to its shareholders. Since shares change hands every day, the company needs a fixed moment at which to check who owns them. The record date is that moment.
The board of directors fixes it. Anyone on the company’s list as of that date is entitled to the dividend. Anyone who is not on the list is not.
What do you need to hold on the record date?
To receive the dividend, you must hold the shares in your demat account on the record date. A demat account is the account that holds your shares in electronic form. Holding the shares on some other day does not count, and neither does having held them last month.
Who decides the ex-dividend date?
Not the company. Indian stock exchanges determine and notify the ex-dividend date. So the two dates come from two different bodies: the board sets the record date, and the exchanges set the ex-dividend date.
This article does not go into how far apart the two dates fall. The exchange notice for a particular dividend gives both dates, and that notice is the place to check them.
What happens to the share price on the ex-dividend date?
On the ex-dividend date, the share price is expected to fall by roughly the dividend amount. The formula is:
Post-dividend price = Pre-dividend price − Dividend
The reasoning is that the company is about to pay out part of its value as cash. The share is therefore worth that much less once the payout is no longer part of it. In practice, other market news on the same day can push the price up or down as well, so “roughly” matters.
What does this look like in numbers?
This is a hypothetical example. All figures are invented for illustration and are not tied to any real company.
Suppose a share closes at ₹200 before its ex-dividend date, and the company has declared a dividend of ₹5 per share. You hold 100 shares.
- Value before: 100 × ₹200 = ₹20,000
- Expected price after: ₹200 − ₹5 = ₹195
- Value of shares after: 100 × ₹195 = ₹19,500
- Dividend received: 100 × ₹5 = ₹500
- Shares plus dividend: ₹19,500 + ₹500 = ₹20,000
Your total is the same ₹20,000 as before. The dividend moved part of your holding’s value from the share price into cash. It did not add new value on top.
This is the catch with treating a dividend as a bonus. If the price drops by the dividend amount, the payout alone does not leave a shareholder better off than before it.
What rules govern the timing of a dividend announcement?
SEBI, the Securities and Exchange Board of India, is the market regulator. Its Listing Regulations are the rules that companies with shares listed on an exchange must follow. They set three timing rules relevant here:
– Notice of the record date: A listed company must give the stock exchanges at least seven working days’ advance notice of a record date. The count excludes the day the company gives the notice and the record date itself. – Declaring the dividend: A listed company must declare or recommend a dividend at least five working days before the record date. Again, the intimation day and the record date are excluded from the count. – Gap between record dates: A listed company must keep at least thirty days between two record dates.
The first two rules mean the exchanges and shareholders get advance warning. A record date cannot appear overnight. The third rule means a company cannot fix record dates back to back.
What is the difference between declaring and recommending a dividend?
The facts above use both words, and this article does not go beyond them. What matters here is that, either way, the declaration or recommendation has to come at least five working days before the record date, with the two end days excluded.
How do the two dates fit together?
Here is how the pieces line up for any one dividend:
- 1. The company declares or recommends the dividend at least five working days before the record date.
- 2. The company gives the exchanges at least seven working days’ notice of the record date.
- 3. The exchanges determine and notify the ex-dividend date.
- 4. On the record date, the company lists the shareholders who hold shares in demat accounts.
- 5. On the ex-dividend date, the price is expected to fall by roughly the dividend amount.
Keeping the two dates apart avoids a common mix-up. The record date decides who is on the company’s list. The ex-dividend date is the exchange-notified date on which the price adjusts. A share price that falls on the ex-dividend date reflects the payout leaving the share. It does not mean the share has become cheaper in any other sense.
Sources and last check
Facts in this article were checked against the sources below on 1 November 2026. Rules and figures can change; check the primary source before acting.
- investor.sebi.gov.in (regulator or exchange)
- angelone.in (broker education)
- upstox.com (broker education)
- groww.in (broker education)
- sebi.gov.in (regulator or exchange)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.
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