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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions

A company declares a cash dividend, and the record date is fixed. A DP's client asks who will receive the dividend for shares held in demat form. Who is entitled to receive it?

Dividend goes to those shown as beneficial owners in the depository's records at the close of the record date. The depository gives this list to the issuer. Buyers after that date, the DP, or only physical holders have no special claim.

  1. APersons whose names appear as beneficial owners in the depository records at the end of the record dateCorrect
  2. BPersons who bought the shares after the record date
  3. CThe DP holding the shares as custodian
  4. DOnly persons holding physical certificates

Explanation

The depository furnishes the issuer with the list of beneficial owners as at the close of the record date, and dividend is paid to them. Buyers after the record date are not on the list, and the DP does not own the shares. Demat holders are fully eligible.

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