What does ex date and record date mean?
Record Date:
The record date, which is set by a company's board of directors, is the date on which the company compiles a list of shareholders of the stock for which it has declared a dividend. This list is used to determine the shareholders entitled to receive the dividend. Shareholders holding the shares in their demat accounts on the record date are eligible for corporate actions such as entitlement of rights shares, bonus shares, stock splits, dividends, etc.
Ex-Date:
With the onset of the T+1 settlement cycle, the ex-date is the same as the record date. Investors who purchase shares any day before the ex-date (or record date) will be documented as owners of shares on the record date. That means they'll be entitled to receive the benefit of corporate actions. Investors who purchase shares on or after the ex-date (or record date) won't be recognized as shareowners on the record date. Since India follows a T+1 settlement cycle, if you buy shares on the ex-date (or record date), you will not hold the shares on the record date. Hence the shareholder will not be eligible for corporation action benefit if he buys the stock on ex-date (or record date).
The record date is the cut-off date used to determine which shareholders of a stock are entitled to a dividend. The record date is set by the board of directors of a corporation. Based on the record date, the board of directors can also determine who should receive stock reports and other financial information relating to the investment.
The ex-dividend date (or ex-date) of a stock is dictated by stock exchange rules and is usually set to be one business day before the record date.
To be eligible for any corporate action, you will have to have a position in the relevant stock before the ex-date, and on the record date, the stock needs to be present in your demat account.
For example: Consider corporate action of dividend for ABC company, where ex-date is 1st Oct 2020, and the record date is 3rd Oct 2020, then you should have the stock in your demat account by the 3rd of October 2020 for being eligible for receiving the dividend.