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

A company declares a cash dividend with the record date falling on a day when Mr. Shah's demat account shows 500 shares credited that morning, following a purchase made two trading days earlier under T+1 settlement. Which approach correctly determines whether he is entitled to the dividend?

He is eligible, because dividend entitlement is based on the beneficial owner holdings recorded in the depository as at the record date, and his shares were already credited. No intimation to the DP is required, and the contract note date is irrelevant.

  1. AEntitlement depends on the beneficial owner position at the end of the record date; since the shares settled in his account on or before that date, he is eligibleCorrect
  2. BHe is ineligible because shares bought within two days of the record date are never entitled
  3. CHe is eligible only if he informs the DP in writing before the record date
  4. DEntitlement is determined by the date the contract note was issued, regardless of demat credit

Explanation

Dividend entitlement follows the beneficial owner position recorded by the depository as at the record date. Shares already credited to his account by then are counted. No written intimation is needed, and the contract note date does not decide entitlement.

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