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NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions

A company declares a dividend of ₹6 per share with the record date on a Friday. Under the current T+1 settlement cycle in India, which is generally the last day to buy shares to be eligible for the dividend?

The last cum-dividend day is the Thursday before the record date. Under T+1 settlement, shares bought on Thursday settle on the Friday record date, while shares bought on Friday settle too late, so the stock trades ex-dividend from Friday.

  1. AThe Friday record date itself
  2. BThe Thursday before the record dateCorrect
  3. CThe Wednesday before the record date
  4. DThe Monday after the record date

Explanation

With T+1 settlement, a purchase must settle by the record date. Shares bought on Thursday settle on Friday, so Thursday is the last cum-dividend day. A Friday purchase settles the next business day, which is too late, so the ex-date is the record date itself.

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