Why were the shares not eligible for corporate action benefits even though they were purchased before the ex-date?
To
be eligible for corporate action benefits (like dividends, bonuses, or stock
splits), investors must have the shares credited to their demat accounts on or
before the ex-date or record date. Here are the reasons why shares purchased
before the ex-date might not be eligible:
1.
Shares Not Credited on Time: If the shares haven't been credited to the Demat account by the
record date or ex-date, they won't qualify for the benefits. This can happen in
the following situations:
2.
Settlement Holiday:
o Example: If you buy shares on Monday and the record date is Tuesday, but
Tuesday is a settlement holiday, the shares will be credited on Wednesday.
Since the shares are not in your demat account by the record date (Tuesday),
they won't be eligible for corporate action benefits.
o Solution: To ensure eligibility, buy the shares at least one trading day
before Monday so they are credited to your account by the record date.
3.
Short Delivery:
o Explanation: If the seller fails to deliver the shares, it's known as a short
delivery. In such cases, the exchange conducts an auction and delivers the
shares to your demat account by T+2 days.
o Example: If you buy shares on Monday, but due to short delivery, they are
credited on Wednesday or later, they won't be eligible for benefits if the
record date is Tuesday.
o Impact: Since the shares are not in your demat account on the ex-date or
record date, you miss out on the corporate action benefits.