Frequently Asked Questions
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 | What is a the Stock Exchange |
A Stock Exchange is a market place where shares and bonds can be bought and sold. The members of the Stock Exchange trade in the shares and bonds on behalf of their customers. When the buyers and seller agree on a price for a share or a bond, a trade is made and ownership changes hands. Many of us are familiar with the concept of ownership, whether we own land, cattle, a bicycle or a car.
| What is a share |
A share simply means, a share of a business or company.Stocks and Shares are the same. When you buy a share you become part owner or shareholder of a business or company. This allows you to be involved in certain decisions regarding the future of the company.
When an individual becomes a shareholder he/she becomes a member of the company. Shareholding in a company gives an individual certain rights. Shareholders meet at an annual genera meeting (AGM) of the company where they can participate in important decision making on the running of the company.
As a shareholder, you are also able to partake in the company’s profits. If the company makes a loss shareholders do not have to pay any money, but the value of their shares may go down.
Shares that are traded on the Stock Exchange are normally referred to as stocks
| Why do companies sell there shares |
Companies sell their shares to the public to raise capital so;
that they can expand their business. To do this, they might invite other people to become shareholders. Before a company applies to the Lusaka Stock Exchange (LuSE) to be listed, it must comply with certain regulation in order to qualify as a listed company.
| What is floatation |
A flotation is a first public offering of shares in a particular company, these shares are offered at a price determined to be the best price they can be sold on the market. The shares will be traded on the Stock Exchange, to anyone who wants to buy them, thus enabling a wider private share ownership of companies by Zambians.
| Which companies can be floated |
Companies with good future prospects will be chosen for public floatation. This means only companies that have a sound capital investment base, good profitability both now and in the future, that are well established with a good market for their products, and are big enough to allow for a large number of investors.
| How do I become a share holder |
There are three methods of becoming a shareholder.
i) By buying shares directly from a company when it first issues them.
ii) By buying existing shares already in public hands on the Stock Exchange through a broker.
iii) By buying shares from ZPA sponsored parastatal company when it is privatized through the PTF.
| Who can buy shares |
Anybody in Zambia can buy shares whether you are a widow, pensioners, retrenchee, marketer, employed or unemployed
| Why should you buy shares |
You can buy shares for a number of reasons;
(1) To become a part owner of a company and thereby take part in the company’s management activities.
(2) Buying shares means a long-term investment.
(3) It is possible to increase one’s estate, and thus improve one’s standard of living with extra income you may earn.
(4) Shares can also be used as a guarantee when applying for a loan from a financial institution.
(5) You can turn your shares into cash whenever you need to by selling them on the Stock Exchange.
| Can you afford to participate on the stock market |
Participating on the stock market should be your own decision based on whether you have enough extra savings to put into a long term investment
| What happens when you buy shares |
A company that is listed on the LuSE is a public company whose shares can be bought and sold on the Stock Exchange. When you instruct a broker to buy shares on your behalf, you are sent a confirmation, which shows;
(1) The number of shares bought
(2) The price per share
(3) The commission charged and
(4) The total amount to be paid.
One you have paid for the shares, your personal particulars and address will be given to the LuSE and your name shall be entered in the shareholders register. You will receive a report periodically, from your broker giving a statement of the shares held in your account. It is not necessary to obtain a certificate to prove ownership of shares, the LuSE will keep a record of your ownership in the central depository, but you can apply for a share certificate at a fee. When you sell your shares, you must return the certificate to the LuSE if you obtained a certificate together with a signed transfer form. When your shares are sold, your name will be removed from the company’s register and the name of the buyer will be registered in the records.
| How do you make money |
Remember that you become an investor and part owner of a company when you buy shares. During good economic times a company may grow, and decline during bad periods, the price of the shares may fall below what you paid for them and you have to bear this loss should you at any time decide to sell these shares.
When your company grows and makes a profit, you benefit through dividends received from the company and capital growth on the investment because the price of the shares will increase.
The decision to hold or sell shares depends entirely on you, and how you view the future performance of the company you have invested in.
| What is the PTF |
The Privatization Trust Fund (PTF) has been set up specifically to take over from Government the shares in those companies to be privatized through public flotation.
These shares will be reserved for later sale to Zambian investors. Ample notification for the floatation will be given to the public, so that everyone can participate should they so wish.
| Will you be treated equally as any other shareholder? |
YES! All shareholders holding the same type of sharesare treated equally and entitled to the same opportunities and benefits of participation
| Who will ensure fair play for all participants? |
The Securities and Exchange Commission is committed to supporting the operation of a free, orderly, fair securities market and strengthen the rights of all participants on the stock exchange market by protecting them from fraud and other abuses