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Legal Definitions - record date
Definition of record date
The record date is a specific date established by a company or organization to determine which shareholders or members are eligible to receive certain benefits or exercise particular rights.
Only individuals officially listed as owners or members on the company's records as of the close of business on this designated date are entitled to the announced dividend, voting privileges, or other corporate actions. Anyone who buys shares after the record date, but before the actual event (like a dividend payment), will not be eligible for that specific benefit.
Example 1: Dividend Eligibility
Imagine "Tech Innovations Inc." announces it will pay a dividend to its shareholders. The company sets a record date of October 15th. This means that only individuals who are officially registered as shareholders of Tech Innovations Inc. on October 15th will be eligible to receive that dividend payment. If an investor buys shares on October 16th, they will not receive this particular dividend, even if the actual payment date is later in the month.
Example 2: Voting Rights for a Shareholder Meeting
A publicly traded company, "Global Conglomerate PLC," schedules its Annual General Meeting (AGM) for June 20th. To determine who is eligible to vote at this meeting, the company establishes a record date of May 15th. Therefore, only those individuals who are recorded as shareholders of Global Conglomerate PLC on May 15th will receive proxy materials and be entitled to cast votes on company matters at the AGM. Someone who purchases shares on May 16th or later would not have voting rights for that specific meeting.
Example 3: Eligibility for a Rights Offering
Consider "Green Energy Solutions," a company that decides to issue new shares to its existing shareholders through a "rights offering," allowing them to buy additional shares at a discounted price. The company declares a record date of March 1st for this offering. This means that only shareholders who are on the company's books as of March 1st will receive the rights to purchase these new shares. An investor who acquires shares on March 2nd would not be eligible to participate in this particular rights offering.
Simple Definition
The record date is a specific day set by a company to identify which shareholders are eligible for a particular corporate action. This means only those shareholders whose names appear on the company's official records by the close of business on that date will receive dividends, vote at meetings, or participate in other defined events.