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

A company has a record date of 10 June for a cash dividend. Mr. Shah buys shares on the exchange on 9 June and the trade settles on a T+1 basis on 10 June. Mr. Rao sold shares on 7 June, which settled on 8 June. A third investor, Ms. Nair, buys shares on 10 June, settling 11 June. Who will be entitled to the dividend?

Only Mr. Shah is entitled to the dividend. The depository determines beneficial owners from holdings at the close of the record date, and his shares were credited on 10 June. Mr. Rao had already delivered his shares, and Ms. Nair's shares arrived after the record date.

  1. AOnly Ms. Nair
  2. BOnly Mr. Rao
  3. CMr. Rao and Mr. Shah
  4. DOnly Mr. ShahCorrect

Explanation

Entitlement depends on holding the shares in the depository records at the close of the record date. Mr. Shah's shares were credited on 10 June, so he appears in the list of beneficial owners. Mr. Rao had already transferred his shares on 8 June, and Ms. Nair's shares were credited on 11 June, after the record date, so neither qualifies.

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