In some cases, special dividends may have different rules than regular dividends concerning the ex-dividend date. If a special dividend is less than 25% of the stock price, standard rules apply regarding the ex-dividend date (ex-date is before the record and pay date). However, if a special dividend is greater than 25% of the stock price*, the ex-dividend date will be after the record date and pay date.

In the case of a regular dividend or a special dividend of less than 25% of the share price, one would need to own a stock by the record date in order to be entitled to the dividend. However, this is not the case for special dividends that are more than 25% of the stock price. If one were to sell a stock after the record date but before the ex-dividend date, they would no longer be entitled to the dividend. The shares would be tagged with something called a "due bill" which means that the seller is obligated to pay the dividend to the buyer. Likewise, if one were to buy a stock after the record date but before the ex-dividend date (and hold it through the ex-date), they would be entitled to the dividend from the seller.

*Please note, the 25% or more rule is a general rule and will not apply in all cases. Certain foreign stock dividends will not follow the rule and some domestic stocks are granted an exclusion. For information regarding regular dividends, please reference KB 47.