06 July 2024
The process of determining which date to use for uploading the Beneficiary Position (Benpos) when dealing with ex-dividend dates and record dates involves specific guidelines set by the depositories.
### Key Dates: - **Ex-Dividend Date**: The date on which the stock starts trading without the dividend value. This means anyone buying the stock on or after this date will not be entitled to the declared dividend. - **Record Date**: The date on which the company identifies the shareholders eligible to receive the dividend.
### Determination by Depositories: Depositories generally consider the **record date** for uploading the Benpos. The record date is crucial because it is the cut-off date established by the company to determine which shareholders are entitled to receive the dividend.
### Why Record Date is Used: - **Official Shareholder List**: On the record date, the company finalizes the list of shareholders who are eligible to receive the dividend. The depository needs this definitive list to accurately update the Benpos. - **Clearance and Settlement Process**: The ex-dividend date is typically set one business day before the record date to account for the T+2 (trade date plus two days) settlement cycle. This ensures that all trades executed up to the ex-dividend date are settled and reflected in the shareholder records by the record date.
### Process: 1. **Company Announcement**: The company announces the dividend, specifying the ex-dividend date and the record date. 2. **Stock Trades**: Shares bought before the ex-dividend date will include the right to the dividend, while shares bought on or after the ex-dividend date will not. 3. **Settlement and Updating Records**: All trades are settled by the record date, and the depository updates the Benpos based on the shareholders as of the record date.
### Practical Example: - **Dividend Announcement**: A company announces a dividend on March 1, with an ex-dividend date of March 10 and a record date of March 11. - **Trading Impact**: Shares purchased on or before March 9 will be eligible for the dividend. Shares purchased on or after March 10 will not be eligible. - **Benpos Update**: The depository will update the Benpos based on the shareholder records as of March 11.
### Conclusion: For the purpose of uploading Benpos, depositories use the record date to determine the eligible shareholders. This ensures that the information is accurate and aligns with the official list of shareholders entitled to dividends.
For detailed guidelines, you can refer to the specific instructions provided by depositories like the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL).
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