When it comes to corporate actions (payouts) like dividends, bonus shares, rights issues or stock splits at the Pakistan Stock Exchange (PSX), understanding the ex-date (X - Date) and entitlement date is crucial for investors. While they're closely related, they serve distinct purposes:
Entitlement Date
If you buy a stock on the PSX on or before the entitlement date, you will be entitled to receiving the upcoming payout. The entitlement date is set by the company's board of directors.
For Buyers: If you buy a stock on the PSX on or before the entitlement date, you will be entitled to receive the upcoming payout.
For Sellers: If you sell a stock on the entitlement date, you will not be entitled to receive the upcoming payout.
How is it calculated: The entitlement date of payouts is determined by subtracting two business days from the book closure start date. This is done because of the settlement period (T+2) followed by the PSX.
Significance: Only shareholders whose names appear on the company's shareholder register by the end of the trading day on the entitlement date will receive the payout.
Ex-Date ( X - Date)
The ex-date is the date on which a stock trades without the right to the upcoming payout (dividend, bonus, rights, or stock splits) on the PSX. On ex-date, the stock opens at its ex-price (also known as x-price).
For Buyers: If you buy a stock on the PSX on or after the ex-date, you won't be entitled to receive the upcoming payout.
For Sellers: If you sell on or after the ex-date, you will still receive the payout.
Price Impact: On the ex-date, the stock's price drops by an amount roughly equivalent to the dividend or the value of the other entitlement (bonus percentage or right percentage). This is called the ex - price (x - price).
How is it calculated: The ex-date is one business day before the book closure start date.
To be eligible for a payout, you must hold a stock at the end of the trading session on its entitlement date.