Record date

The record date is the date a company's board sets to determine exactly which shareholders are entitled to receive an upcoming dividend, or to vote at an upcoming shareholder meeting. The company checks its shareholder records as of that date, and whoever is a recorded owner at that point is the one who gets paid or gets to vote.

Because it can take a little time for a stock trade to settle and for ownership to formally change hands on the company's books, the ex-dividend date is set relative to the record date based on the standard settlement cycle for stock trades. An investor needs to have purchased the stock early enough that the trade settles before the record date in order to show up as the owner of record and qualify for the dividend or the vote.

The record date matters most around dividend payments and annual meetings. For dividends, missing the cutoff by even a day means the buyer will not receive that particular payment, even though they now own the stock, since the previous owner is still the one recorded as entitled to it. For shareholder votes, only those who owned shares as of the record date can cast a ballot, even if they sell the stock before the actual meeting takes place.