Why were the shares not eligible for corporate action benefits even though they were purchased before the ex-date?

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.