1. #1

    Join Date
    Aug 2011
    Lahore, Pakistan
    Blog Entries

    Corporate Action, Ex-Date, Record Date and Benefit entitlement

    A corporate action is an event initiated by a public company that affects the securities issued by the company. Corporate action can be in many forms. There are classified as
    1) Mandatory
    2) Voluntary and
    3) Mandatory with choice.

    In Pakistan, corporate action events are often described as

    1) Events in which company pays cash such as dividend and
    2) Events in which securities are given in place of cash such as merger, bonus etc.

    I have received many mails from shareholders asking questions on in what scenarios they will receive corporate action benefits.
    These questions pertain to whether shares purchased before ex-date, after ex-date, before record date etc. will be eligible to receive corporate action announced by the company.

    Here is a list of scenarios and whether a shareholder will receive benefit announced by the company in different scenarios:

    Sr. No. Transaction Eligibility for benefit of corporate action
    1 Shares purchased before ex-date Yes, for the buyer
    2 Shares purchased before ex-date but not received before record date because counter party defaults Yes, for the buyer
    3 Shares purchased on or after ex-date No, buyer won’t get benefit
    4 Share sold on or after ex-date Yes, seller gets benefits
    5 Shares sold before ex-date but not delivered before record date because counter party has not paid Yes, seller receives benefits
    6 Shares transferred by counter-party after ex-date but before record date in the account because of off market transaction Yes, buyer gets benefits
    7 Shares purchased and sold as off-market transaction between ex-date and record date. Depends on the agreement. The benefit received will be driven by agreement

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