Record date
Also written Books closure date
The date on which a company looks at its register and decides who gets the bonus, dividend, rights or split — you must be holding the shares in your demat account at the end of that day.
In plain language
A company declaring a benefit has to draw a line somewhere. The record date is that line: whoever the register shows as a shareholder on that date receives the benefit, and whoever it does not, does not.
The complication is that buying a share and owning it are not the same day. You buy on the exchange today; the shares reach your demat account on settlement. So the last day you can buy and still be on the register is earlier than the record date itself.
The first day the share trades without the benefit attached is the ex-date. Up to one trading day before the record date the share trades cum-benefit — cum-rights, cum-dividend, cum-bonus. From the ex-date it trades ex-benefit, and the exchange adjusts the base price to match.
How it works
Under the T+1 rolling settlement cycle the arithmetic is tight, and the workbook works it through explicitly.
Take a bonus in the ratio 1:1 with a record date of 28 May 2025. The benefit goes to investors holding the securities in their demat account on 28 May 2025, end of day. The ex-date is also 28 May 2025 — from that day the security trades on an ex-benefit basis.
- An investor who bought on 27 May 2025 receives the shares in demat on 28 May before end of day, is on the register on the record date, and is eligible.
- An investor who bought on 28 May 2025 receives the shares on 29 May before end of day, is not on the register on the record date, and is not eligible.
The price adjustment follows the entitlement. The closing price on 27 May 2025 was Rs 500; the adjusted base price for 28 May 2025 is Rs 250, because one free share now accompanies each existing share.
Exchanges adjust the base price of the stock from the day it starts trading without the benefit, and publish the corporate action along with both the record date and the ex-date.
The formula
Bonus, ratio A:B Adjustment factor = (A + B) / B
Stock split / consolidation, A:B Adjustment factor = A / B
Rights issue
A = rights entitlement, B = existing shares
P = underlying close on the last cum date, S = rights issue price
Benefit per share E = (P - S) x A / (A + B)
Adjustment factor = (P - E) / P
In the equity F&O segment, for a bonus, split or consolidation the new strike price is the old strike divided by the adjustment factor, while the market lot and the position are multiplied by it. For a rights issue the directions reverse: the strike is multiplied, and the lot and position are divided.
A worked example
XYZ Ltd announces a 1:1 bonus, record date 28 May 2025.
| Value | |
|---|---|
| Record date | 28 May 2025 |
| Ex-date | 28 May 2025 |
| Close on 27 May 2025 | Rs 500 |
| Adjusted base price for 28 May 2025 | Rs 250 |
| Adjustment factor, bonus 1:1 | (1 + 1) / 1 = 2 |
An investor holding 400 shares at the close of 27 May:
Before: 400 shares x Rs 500 = Rs 2,00,000
After : 800 shares x Rs 250 = Rs 2,00,000
Nothing was created. The holding doubled and the price halved, and that is precisely the design intent — the workbook states that the basis for adjustment in the F&O segment is that the value of the position on the cum and ex dates shall continue to remain the same as far as possible, so that in-the-money, at-the-money and out-of-the-money positions keep their relative status.
An investor who saw the price "fall from Rs 500 to Rs 250" on 28 May and bought that morning thinking it cheap gets neither the bonus nor a bargain: the shares arrive on 29 May, one day too late.
Why NISM asks about it
Chapter 6 (Settlement Process, section 6.7 Corporate Actions Adjustment) carries both the record date and ex-date definitions and the full adjustment methodology, including the adjustment factor table. Expect a T+1 eligibility question of exactly the 27-May-versus-28-May form, a base price adjustment computation, and an adjustment factor calculation for a bonus or split. Section 6.7.3 adds the timing rule: adjustments are carried out on the last day the security trades cum basis in the underlying market, after the close of trading hours.
Common exam traps
- Eligibility is decided by the demat account, not the trade. Buying on the record date is too late under T+1, because the shares arrive the next day.
- Cum-benefit runs up to one trading day before the record date. From the ex-date onwards the share trades without the benefit.
- The bonus adjustment factor for 1:1 is 2, not 1. For a bonus of A:B it is (A+B)/B; for a split or consolidation of A:B it is A/B. Using the bonus formula on a split is the standard error.
- Strike divides, lot and position multiply — for bonus and splits. For a rights issue all three reverse. Getting the direction wrong turns a correct formula into a wrong answer.
- Cash dividend is the only cash benefit. Bonus, rights, merger, de-merger, amalgamation, splits, consolidations, hive-off, warrants and secured premium notes are all stock benefits.
- Adjustments are applied to all open positions, and may force-close a contract before its stated expiry so that the adjusted contract can trade instead.
Where this is taught
- Series V-A · Chapter 7: Net Asset Value, Total Expense Ratio and Pricing of unitsintroduced here
- Series VI · Chapter 10: Special Services - Public Offering / Corporate Actionsintroduced here
- Series XV · Chapter 9: Corporate Actionsintroduced here
- Series V-D · Chapter 7: Net Asset Value, Total Expense Ratio and Pricing of unitsintroduced here
- Series XXI-A · Chapter 2: Introduction to Securities Marketsintroduced here
- Series VII · Chapter 6: Settlement Processintroduced here
- Series X-A · Chapter 6: Securities Market Segmentsintroduced here
Related terms
- Adjustment factorThe ratio by which the strike price, market lot and position of an equity F&O contract are revised after a bonus, split, consolidation or rights issue, so the position's value stays the same.
- Ex-dateThe first day a security trades without a corporate action benefit, and the cut-off that decides whether a short-delivery auction near that action proceeds normally or is closed out directly instead.
- Extraordinary dividendFor equity F&O adjustment, a dividend at or above 2% of the underlying's market price; the dividend is deducted from all option strikes and from futures positions from the ex-dividend date.
- Rights issueAn offer of new shares at a set price to existing shareholders in a fixed ratio to what they already hold, so that their proportionate stake is not diluted when the company raises fresh capital.
- Dividend Distribution TaxThe tax a mutual fund scheme itself deducted before paying a dividend, abolished from April 2020 — since when the payout has instead been taxed in the investor's own hands at their slab rate.
- Bonus strippingBuying units shortly before a bonus issue and selling the originals at the halved NAV to manufacture a capital loss — a loss the Income Tax Act disallows inside a defined 3-month and 9-month window.
- Distributable reservesThe profits a mutual fund scheme may pay out as dividend (IDCW): accrued profits, ignoring valuation gains but deducting valuation losses — so payouts come only from real, realised profit.
- Transfer of IDCW planA facility that automatically invests the IDCW (dividend) declared in one scheme into another scheme of the same mutual fund, on the next business day after the record date.
- Cash corporate actionA corporate action that distributes money - such as dividend or interest - where the depository only tells the issuer who was entitled on the record date, and the issuer or its RTA pays them directly.
- Non-cash corporate actionA corporate action that distributes securities or changes holdings rather than paying money - bonus, rights, conversion, split, merger - which the depository executes by crediting and debiting demat accounts.
- Auto Corporate ActionA corporate action such as a split, consolidation, merger or bonus issue, executed automatically across all holders by a fixed ratio, without the Issuer crediting each beneficial owner individually.
- Rights of the pledgorThe rule that a pledgor keeps every corporate benefit on pledged securities until invocation, provided the pledge still covers at least one share on the corporate action's execution date.
- Transit accountAn NSDL-only holding account, such as a settlement or intermediary account, that must be cleared of balances well before a book closure or record date so the right beneficial owner gets the corporate benefit.
- Beneficial ownerThe investor who owns dematerialised securities for every practical purpose — the depository is the registered owner on the company's books, but the dividends, bonus, rights and votes are the investor's.
- Investor Education and Protection FundThe government fund that takes in dividends, deposits and shares left unclaimed for seven years, spends the income on investor education, and refunds the rightful owner whenever they finally claim.
- One ISIN ruleSEBI does not allow a company more than one ISIN for its equity shares unless the amount called and paid differs or the shares carry differential voting rights — all shares under an ISIN must be pari passu.
- Nodal OfficerThe Director, CFO or Company Secretary a company nominates to verify claims for shares and money it has sent to the IEPF and to coordinate with the IEPF Authority on the claimant's behalf.
- Settlement cycleThe time window, fixed by the exchange, within which securities and funds for a trade must be delivered — T+1 in Indian secondary markets since 27 January 2023, meaning one trading day after the trade.
- Small shareholderIn a buy-back, a shareholder whose holding is worth not more than Rs 2 lakh at the record-date closing price on the highest-volume exchange — for whom 15 percent of a tender buy-back is reserved.
- Fast track rights issuesA quicker rights issue route for listed InvITs and REITs that meet SEBI's parameters — offer document filed with the stock exchanges, with only a copy to SEBI.
- Close outSettling an undelivered sale in cash instead of shares: the defaulting seller is charged at a penal close-out price, used when an auction finds no sellers or is not held at all.