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The Nigerian Stock Exchange
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Page Content
EQUITIES
Shares are negotiable instruments issued by a corporation that represent a capital share of that corporation. The Nigerian Stock Exchange (NSE), as a preferred listing destination in Africa, features large to small-sized companies from different economic, that meet and adhere to its globally acceptable high listing standards.
By i
nvesting in shares of listed companies on the NSE you become part owner of these listed companies and thus can benefit from share price growth and/or income paid as dividends. Ownership interest depends on the number of shares held by an investor relative to the company’s outstanding shares and class of shares held.
An investor can trade shares by using a licensed stockbroker to buy and sell shares on his/her behalf or remotely through direct market access.
Key features
Capital growth:
Increase in share market value. Please note that shares can also lose value, as stock prices can fall below your purchase price due to macroeconomic or company-specific factors.
Dividends:
Share ownership incentive given by a company to its shareholders, usually as a share of profits. Some companie
s pay dividends regularly while others seldomly pay or not pay at all. Some companies also allow you to reinvest dividends into new shares.
Buying and selling:
Shares list
ed on NSE are easily traded and market makers also help provide liquidity. Investors can buy or sell quickly through a licensed stockbroker. Brokerage fees for executing a trade are usually a fixed fee or a small percentage of the value of the shares traded.
Shareholder rights:
As a shareholder in a listed company, you will have the right to receive company information and to vote at annual general meetings. You can also have the right to participate in some further share issues by the company, such as rights issues. Your rights may vary depending on the type of shares that you hold.
Types of shares
Ordinary shares
, also known as common shares, provide the holder with voting rights and entitle him or her to a share of the company's success through dividends (when offered), capital appreciation and scrip. In the event of liquidation, ordinary shareholders have rights to a company's assets only after preference shareholders, as well as bondholders and other debt holders, have been satisfied.
Common shareholders sometimes enjoy what are called "preemptive rights." Preemptive rights allow common shareholders to maintain their proportional ownership in the company in the event that the company issues new shares. This means that common shareholders with preemptive rights have the right, but not the obligation, to purchase as many new shares of the company as it would take to maintain their proportional ownership in the company.
Most of the equities listed on the NSE are ordinary shares (common shares), and such shares account for most of the turnover on the exchange.
Preference shares
holders
are entitled to a preferential distribution of dividends prior to any distribution to the ordinary shareholders. Moreover, preference shares typically pay a fixed dividend, whereas common shares do not. Unlike common shareholders, preference shareholders usually do not have voting rights. In the event of a company bankruptcy, preference shareholders have a right to be paid from the company assets first.
There are four types of preference shares: cumulative preferred shares, which must pay out all dividends including skipped dividends; non-cumulative preferred shares, which do not pay out skipped dividends; participating preferred shares, which give the holder dividends plus, under certain conditions, extra earning; and convertible shares, which can be exchanged for a specified number of ordinary shares.
Interested in buying shares? Get in touch with a
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