Record date

Why corporations fix record dates

Share ownership changes continuously. Without a fixed point in time at which the corporation determines who its shareholders are, a corporation could not reliably send notice of a meeting, count votes, or pay a dividend. The record date solves this by freezing the shareholder roll at a specific moment: the corporation looks at the share register (or the stock ledger, in US practice) as of the close of business on that date and treats those holders as entitled to the action.

A record date can be set for any corporate action that requires identifying who the shareholders are: meeting notices and voting, dividend or other distribution payments, rights offerings, conversion events, plan-of-arrangement votes, or consent solicitations. A single resolution typically fixes record dates for each of these purposes; the dates can differ.

How the record date relates to the meeting or payment date

The record date is always earlier than the action it supports. For an annual general meeting:

• The board sets the meeting date.
• The board sets the record date, typically 30 to 45 days before the meeting (within the statutory window).
• The corporation sends notice to every shareholder on the register as of the record date, at the address recorded there.
• The meeting occurs on the meeting date. Shareholders of record on the record date can vote in person or by proxy; later transferees cannot vote unless the seller gives them a proxy.

For a dividend, the structure is similar:

• The board declares the dividend and sets the record date.
• The corporation pays the dividend on the payment date (typically two to four weeks after the record date), to the holder of record on the record date.
• If shares are transferred between record date and payment date, the dividend is paid to the seller, not the buyer. The buyer can negotiate this in the purchase agreement.

How record dates are set

The board adopts a resolution fixing the record date, typically as part of the resolution calling the meeting or declaring the distribution. The resolution recites the action, fixes the record date, and instructs the corporate secretary to give notice to holders of record. The corporate secretary takes a snapshot of the share register as of the close of business on the record date and uses that snapshot as the entitled-shareholder list.

If the board does not fix a record date, the statute supplies a default. Under the CBCA, the default record date for a meeting is the day notice is given. Under the DGCL, the default record date is the close of business on the day immediately preceding the day notice is given for shareholders of record, or the day the board adopts the resolution for written-consent actions. The default rules are usable but the board usually sets a specific date so that the entitled-shareholder list is unambiguous.

Edge cases worth knowing

Adjournments. If a meeting is adjourned to a later date, the record date typically remains the same: the holders who were entitled to vote at the original meeting are entitled to vote at the adjournment. Some statutes allow the board to fix a new record date if the adjournment extends beyond a certain window.

Written consents in lieu of meeting. The record date for a shareholder consent in lieu of meeting is typically the date the first consent is delivered. The corporation has a window (usually 60 days under the DGCL) to obtain the remaining consents.

Conversion and adjustment events. A stock split or stock dividend usually carries a record date that determines which holders receive the new shares. The record date is also the reference point for adjusting option strikes, SAFE caps, and convertible-note conversion ratios for the dilutive event.