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Ex-Dividend Date (also see Dividend section)
The ex-dividend date is determined by the relevant stock exchange rules and is usually one day after the company declares the dividend (Declaration Date), and one day before the record date. The record date being the date set by the company board and is the date by which investors must be recorded on the register to qualify for that dividend.
When an investor buys shares, their name does not automatically get added to the record book. This typically his takes about three days from the transaction date. Therefore, if the date of the record is Aug. 10, one must have purchased the shares on Aug. 7 to receive a dividend. This would make Aug. 8 the ex-dividend date, as it is the date directly following the last date on which you would be entitled to receive a dividend.
If a share sale has not been completed by the ex-dividend date the seller on record is the one who receives the dividend. The ex-dividend date (ex-date) is important, because it determines who receives, and who does not receive, the dividend. The fall in share price reflects the fact new shareholders are not entitled to that payment.
The result is that, typically, a company's shares will trade for less than the dividend amount on the ex-dividend date than they did the day before. If the market and investors are anticipating a particularly large dividend, the share may already “price” that in many days before the ex-date.