A record date is a specific date on which an investor must own shares or investments to receive a dividend or other form of return. It is also used in tax assessment, contracts, and other financial transactions to establish ownership and define rights and responsibilities.
A record date is the recorded date that an investor must own shares or other types of investments to earn a dividend or other form of return. Sometimes referred to as the record date shareholder, this date helps the issuer of the guarantee identify exactly who is entitled to receive the dividend, making the payment calculation process much easier. The term also has applications in other types of financial transactions and evaluations.
Another situation in which the registration date is important is in tax assessment. For example, it is important for a local jurisdiction to know who owns property within the jurisdiction as of a certain date of the year. This makes it possible to know who is responsible for paying property taxes due on real estate, and eliminates any confusion in situations where the property is sold at some point during the calendar year.
Many contracts also use a record date to govern the terms and conditions within the contractual agreement. For example, a provider will use the record date as a means of identifying when the current engagement with a customer will end. This can be especially important when the terms of the contract extend the customer’s discounted price for goods and services. At the same time, the customer will also take into account the registration date, especially if they want to switch to a different provider without incurring penalties, or if they want to negotiate a new contract with the current provider.
Even something as simple as an apartment lease contains a record date. The date establishes when the tenant is allowed to take possession of the residence and when the current commitment to the owner is completed. This same date also establishes when the landlord is free to offer the apartment to a new tenant, sign a new lease with the current tenant at the same monthly rate, or increase the monthly rental rate with a new lease.
In all of your applications, the key function of record date is to set ownership as of a specific date. With tax collection, this makes it easier to keep accurate records and collect the proper amount of tax from the current legal owner. With stocks and bonds, the date establishes who owns those stocks or bond issues as of the date dividends or interest payments are due to be calculated and disbursed. With contracts in general, the date defines the rights and responsibilities of both parties who have signed the agreement.
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