What is a record date?

The determination of a record date is required to ascertain who exactly a company's shareholders are as of that date, since shareholders of an actively traded stock are continually changing. The shareholders of record as of the record date will be entitled to receive the dividend or distribution, declared by the company.

What is a'record date'?

When a company is preparing to distribute dividends to shareholders, it uses a list of shareholders who are holding the security on a particular date. That date is referred to as the 'record date.' For example, a firm may declare a dividend on June 1, payable on July 1 to holders of record on June 15. The record date is June 15.

How does the record date and ex-dividend date work?

Here's how the record date and ex-dividend date would work in the overall dividend payout process. Let's say that on Friday, Feb. 4, XYZ Company declares a dividend for its shareholders. The company's board then announces a record date of Friday, Feb. 18. Shareholders of record on that date will be eligible to receive the dividend.

When do you have to be on a company's record date?

A company’s board of directors sets a record date when you must be on the company’s records as a shareholder to receive the dividend. Companies also use this date to determine who should receive investor information such as proxy statements and financial statements.