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You are Here : Home > Investor Education > Frequently Asked Questions

Frequently Asked Questions

What are shares?
Shares are units of ownership in a company, meaning that a shareholder owns the net asset value of the company e.g. if four people contribute Ksh10 each to buy a cake, each of them will own a quarter each, or the one who contributes more money will get a bigger slice of the cake.

Why own shares, whats the benefit?
Companies can distribute some of the profits to shareholders (dividends) and over time, if the company continues to grow, so will be the value of your investment (capital growth).

What rights do shareholders enjoy?
The right to:

  • vote at shareholder annual meeting on matters concerning the company
  • a dividend (if declared by the directors)
  • Get company information, that is, company circulars, announcement, etc.
  • acquire shares before they are offered to outsiders (new shareholders) right
  • Share in the remaining assets of the company (if a company is liquidated) after the creditors have been paid.

How do I select a stockbroker?
In the same care that you select a good lawyer or accountant, will be the basis of selecting a stockbroker, appropriate for your specific needs. Issues such the following should be able to guide you:

  • Minimum account balances: stockbrokers set the minimum account balances for their clients. You will choose the one within your means.
  • Services required: Some stockbrokers offer research reports, investment advice to their clients, NSE live data (at a fee) and others do not.
  • Type of clients: Other stockbroking firms deal strictly with corporate investors. Therefore, a retail investor (man in the street) should approach stockbroking firms appropriate to his/her needs.
  • Method of trading: If there will be a need for online trading or not.
  • Cost vs. benefits: A client should compare costs of relative stockbroking firms before making a final decision.