The stock market has a concept called a “no-delivery period” which comes into play when a company declares a book closure or record date. This period ensures a clear distinction between who is entitled to receive upcoming corporate benefits, like bonus shares or dividends.
Here’s how it works:
- Trading Allowed: During the no-delivery period, buying and selling of the company’s shares are still permitted.
- Settlement Delayed: However, the actual transfer (settlement) of shares bought or sold happens only after the no-delivery period ends.
This delay helps determine which investors qualify for the corporate benefit.
In simpler terms: Imagine the no-delivery period as a pause button on share deliveries. It allows the company to identify who owns the shares on the record date, ensuring they receive the intended benefits.
In simpler terms: Imagine the no-delivery period as a pause button on share deliveries. It allows the company to identify who owns the shares on the record date, ensuring they receive the intended benefits.
The ex-date is the first day when you can’t expect delivery of a stock to include a company’s recently announced benefits like extra shares (bonus), dividends, or rights. If you buy shares on or after this day, you won’t get these benefits.