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The documentation given by this company is expressed in this fashion:

Stock dividend and will entitle each stockholder of record at the close of business on December 2, 1999, to receive one share for every share of common stock held on the record date. The stock dividend resulting from the split are expected to be distributed by the transfer agent on December 21, 1999. Unify common stock will begin trading on a split-adjusted basis on December 22, 1999.

Now the way it is written shareholders on the record will receive a equal split as of that date. Distribution of splitted will be executed on the 21st, 1999.

Reading the statement above pretty much says that I would be eligible for the split stock on the record date and not the split date.

Please Clarify, Thanks

Everything you wrote above is true. However, brokers and market makers have thought of all these concerns and have a couple of ways of dealing with them.

What I believe to be the most common method of tracking split shares is known as a 'due bill.' A due bill is a contractual obligation between buyer and seller to deliver something after payment is received. You might also see this when you buy a car with an upgraded stereo system that the car dealer has to order, for instance.

Anyone selling shares between the record date and the distribution date will have a due bill placed on their settlement order, requiring that the split shares be given to the new buyer when they are received by the transfer agent. The buyer receives a due bill indicating that they are entitled to the shares to be issued at the split distribution date.

For the many transactions done inside brokerage accounts, the broker automatically handles all this and you end up with the correct number of shares after the split distribution is completed.

A second method of handling this is for the stock to trade ex-rights, at the post-split price, between the record date and the distribution date. This isn't as common, but I have seen it. This is similar to the ex-dividend period.

Nobody is at risk of losing half the value of their investement (and conversely, nobody can make an instant profit) just because of the split paperwork.

Hope this helps!


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