- Personal Finance»
- Investing in Stocks, Bonds, Real Estate, More
Investment In Stocks.
Shares are the units of ownership of a given company whether private or public. So, when one buys up a unit of shares he/she has bought over a bit of the company’s ownership. As such he becomes a SHAREHOLDER; his name is registered in the Shareholders Register. Such a person has equal rights with other shareholders like; attending company meetings, voting, receiving dividends, script offers, bonus shares and yearly financial reports inter alia.
In investing in shares, you need due diligence, information and no matter how little the Capital is, you will surely make it. You don’t need warehouse, shops, marketers, power generators, advert rates, transporters, shipping and clearing cost and much physical engagement. All you need is to buy some units of shares of a given company and while you go about other things your money is being worked for you. At the end of a financial year dividend is paid to you and you reserve the rights to sell your shares at a higher price, any time. So when more people buy Dangote flour to bake and celebrate it means profit for the shareholders. When more people drink out the kidneys for happiness or sorrow its good business for an investor in breweries. You may be surprised to know that you can invest even $100. All you need is Information and others will enrich you with ease.
One can be a shareholder of a Private liability Company or Public Liability Company; whether quoted on the Nigerian Stock Exchange or not. But, it’s better and safer to invest in quoted companies; for transparency, security, easy marketability and monitor. To invest in companies quoted at the Nigerian Stock Exchange one can do so through any of the two doors: Primary Market or Secondary Market.
The primary market is much limited unlike the secondary and all you depend on is the dividend if the company resolves to pay, because you can’t sell at ease.
Often times you have heard on air or read on papers of adverts of companies selling shares and may be you went to banks to purchase them over the counter; that is the Primary Market. In the primary market one hears of Initial Public Offer (IPO) that is public selling of a company’s shares for the first time. And Public Offer (PO) is the public selling of shares of a company, but not for the first time. Note that, the adverts are mere INVITATION TO TREAT not an OFFER, stricto senso; rather you ”offer” to purchase by filling share subscription forms. As such, the company wields the discretion to accept your offer to purchase their shares or rescind such, and communicate same to you, timely. This market allows the selling company to stipulate the least amount and multiples of shares that one can purchase of its shares. Unlike in the secondary market where one can buy as much as he desires. All shares must be fully paid up upon subscription. Presently in Nigeria, it takes up to four or six months before Shares certificates are being issued and delivered to shareholders after allotment. But in the secondary market you are issued Contract notes instead, upon you waiving your rights to share certificates enshrined in section 146 and 147 of the Companies and Allied Matters Act, 1990,cap C20 LFN 2007, not waiting for donkey years. A share certificate is a prima facie evidence of ownership of allotted shares in a given company. If your subscribed shares are not allotted to you, your invested money will be returned to you and with interest if delayed.
Hence as a registered shareholder of a company, you have your rights and duties; right to company meetings, voting, dividends, bonus shares, script offers, companies financial records and corporate politics, inter alia. Now you are part and parcel of the company; you loss when they loss and you gain when they gain. This is the market most of our people indulge in and you see them displaying their share certificates like laurels and awards in ignorance. There are limited and I pray you don’t get pessimistic because of their little profit. Many multi billion shareholders across the world started from the primary market, albeit most of them later moved into the prestigious Secondary Market. Remember you can invest straight into the secondary market without going through the primary.
Join me in next edition, as we explore the secondary market; where the market knows no limits; place of magic stocks!