5.13 Few points one must know


No-Delivery Period

During the physical transaction of shares, it was practiced that whenever a company announces a book closure or record date, the exchange sets up a nodelivery period for that security. During this period only trading is permitted in the security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that investors’ entitlement for the corporate benefi t is clearly determined. Nowadays, since all stocks are traded in the demat form, with effect from August 1, 2009, SEBI has done away with the practice of keeping shares under no-delivery during the record date for corporate announcement like bonus or dividend.

Ex-Dividend Date

This is the date on or after which a security begins trading without the dividend included in the price, i.e. buyers of the shares will no longer be entitled for the dividend which has been declared recently by the company in case they buy on or after the exdividend date.


The first day of the no-delivery period is the ex-date. If there is any corporate benefit such as rights, bonus, dividend announced for which book closure / record date is fixed, the buyer of the shares on or after the ex-date will not be eligible for the benefits.

Investor Protection Fund (IPF)

Despite the various efforts taken by the regulators and the exchanges, some problems might arise. A cushion in the form of an Investor Protection Funds (IPF)is set up by the stock exchanges. This is maintained by the NSE to make good investor claims which may arise out of non-settlement of obligations by a trading member who has been declared a defaulter in respect of the trades executed on the exchange. Payments out of the IPF may include claims arising of non-payment / non-receipt of securities by the investor from the trading member who has been declared a defaulter. The maximum amount of claim payable from the IPF to the investor (where the trading member through whom the investor has dealt is declared a defaulter) is Rs 10 lakhs.

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