Replies to post #149348 on Sino Agro Food Inc (fka SIAF)

[Handlamera]

It is hard to believe that a future unknown number/value can decide! ;-)

[RealDutch]

The question then is whether the >25% is valued compared to when the company first adressed the dividend (>>20 cents), the date of the dividend declaration (around 20 cents???), or at the ex date (<<25%)?

None of the above. Keep guessing. lol.
Actually I had the answer but I forgot it. I think it is the Record Date. It has to be a couple of days before the Record Date otherwise they can't set the ex-date one day before it. That's why I forgot it, because it didn't make 100% sense to me.

But as you know, there is a reason for the deferred ex-dates. Let me look it up for you.

http://groupssa.com/understandingdividenddates.html

A very unusual circumstance, to be sure. But there are good reasons for such a procedure.

On big percentage distributions one of the reasons the ex-date is after the payment date is to prevent the chaos that would be triggered if the the ex-date was before the payment date as is normally the case. For example, if the ex-date was before the payment date for a stock that was selling for $21 and they paid out a distribution of $7, such a dramatic drop in price could potentially, and unfairly, trigger margin calls in margin accounts holding the stock. To the stock brokerage it would appear that the total value of the stock had dropped precipitously when in reality the dividend that had not yet been paid would make up the difference. By making the dividend payment before the stock price is adjusted down on the ex-dividend date, no margin call would be issued because the value of the account would not be unfairly compromised.

Another reason for the use of due bills with stock dividends, spinoffs and extra large cash dividends is that it allows shareholders to receive the full value of their holdings if they choose to sell during the due bill period. Otherwise they would have to wait the days or weeks between a normal ex-dividend date and the payment date.