Frequently Asked Questions

Kindly go through our list of frequently asked questions and check out our list of links to relevant questions. Do not hesitate to contact us / or fill our feedback form if you cannot find the answer to your question here..

1. Who is a Stockbroker

   A Firm or a person who is authorized to buy and sell securities on behalf of investors for a commission called Brokerage. The commission charged is regulated by the Stock Exchange and the Securities and Exchange Commission (SEC).

2. What are Securities?

   Securities are stocks, shares, bonds and debentures.

3. What are Shares and Stocks?

   Stocks and Shares show investors holdings in a particular company, and are often used interchangeably. Shares are securities of companies that give the shareholders opportunity to share in the profit of the companies in form of dividends and bonuses. The benefits here are not fixed. Shareholders in this category assume the greater risk but generally exercise a greater degree of control.

4. What are Bonds and Debentures?

   They represent other kinds of securities. They are documents legally representing a promise by the company or by Government. Both Bonds and Debentures are to be paid with an agreed interest rate over a definite period of time. Claims of both bonds and debentures are relatively high and the holders here assume lesser risk as compared to ordinaryshareholders.Bonds are usually issued by Governments while debentures are issued by companies. Debentures are of different types:
   (I) Redeemable
   (ii) Irredemable
   (iii) Convertible and
   (iv) Inconvertible debentures.
   (I) Redeemable debentures are stocks in which the stockholders receive their capital together with the interest instalmentally.
   (ii) Irredeemable debentures are stocks that the holders do not receive the capital until the contract is terminated.
   (iii) Convertible debentures are those debentures with ffixed interest rate and set maturity date. They can be traded in for a given amount of stocks at any time at the option of the investor. The issuer, however, has the right to call them in, to be redeemed either in cash or for common stock.
   (iv) Inconvertible debentures are those that cannot be traded in for a given amount of stock.
   

5. Why should an investor approach the Stockbroker for purchase of shares instead of making direct contact with the company?

   Security market dealing on stocks and shares are carried out on the floor of The Nigerian Stock Exchange and it is only the Dealing Members (Stockbrokers) of the NSE that are authorised to do so.

6. Who should buy shares?

   Stocks and Shares buying are allowed for anyone (Nigerians and Foreigners) who is 18 years and above. Parents can buy shares for their children in their own names and can transfer same using nominal transfer when those children attain legal age.
   

7. What is the cost of buying Shares and Stocks?

   It actually depends on the price and the quantity an investor is buying at a time. All you need to know, as an investor is the statutory charges and broker's commission due on purchase.

8. Which Stocks should I buy?

   The choice of Stocks to buy actually depends on the investor's purpose on investing. An investor is advised to discuss with stockbroker for professional advice on what to buy after determining his own objective.

9. What are the benefits due on buying shares?

   There are lots of benefits due to shareholders:
   (I) Capital gains as market prices of the shares increase.
   (ii) Dividend that is part of company's profit.
   (iii) Bonus issues which are paid from company's reserve to existing shareholders.
   (iv) Use of share certificate or CSSC statement as collateral for obtaining loan from banks.
   (v) Right to attend meeting of shareholders and participate in the deliberation as voting members.

10. Can an investor divest without the consent of the company?

    An investor can divest without the consent of the company. All he needs to do is to give a Stockbroker a mandate instruction to sell his holdings.

11. What other services do Stockbrokers provide?

    (I)Provide professional advice on choice of investment.
    (ii) Act as issuing houses and portfolio managers.
    (iii) Fund Management.
    (iv) Financial consultancy services.

12. Who do I approach when I have problems with a share certificate or dividend?

    The Registrar of the company. Registrars act as agents to the companies who appoint them. Other functions of a Registrar are as follows:
    (I) Register the shares and the names of the owners in the members' (shareholders) register.
    (ii) Prepares share certificates and send them to the shareholders.
    (iii) Pay out approved dividend to shareholders
    (iv) Verification of shareholders signature

13. How do I get compensated in case of bankruptcy/winding up of a company?

    In case of Bankruptcy, after settling the preference shareholders/other creditors the left over will be used to settle the ordinary shareholders.
    

14. When is transaction of an investor complete?

    The transaction of an investor is completed in transaction day + three working days (T+3) after the transaction has been consummated on the floor, although arrangements are on to put in place transaction day + one day (T+1) for settlement of trades.

15. How can an investor achieve his investment objectives?

    Seeking advisory service from a stockbroker on a regular basis could assist an investor to achieve his investment objectives.

16. Any relationship between the NSE and CSCS?

    NSE and CSCS operate independently. Shares for trading on the floors of NSE must be in CSCS system (Depository) before they could be traded on. After trading, clearing and settlement of trades are handled by CSCS. The CSCS is a subsidiary of the Nigerian Stock Exchange (NSE).