Frequently Asked Questions

What are shares?

What benefits can I derive from being a shareholder in a company?

What are dividends?


What are bonus shares?

What is an Annual General Meeting?

What is ex-dividend (ex-div)?

What is ex-dividend date?

How often do I get dividends and bonuses?

What is ex-rights?

What is ex-rights date?

What is the process of investing in the Nigerian Capital Market?

Can I get a loan using my shares as collateral?

Can you give me a loan to invest in shares?

What kind of charges do I incur when I buy or sell shares?

What is a portfolio of shares?


Can you help me build and manage my equity portfolio?

How much do I need to begin to invest in shares?

How long do I need to invest, to get maximum returns?

Can I lose money on the stock exchange?

How do I start to invest through you?

What are shares?
Shares are units of investment in a company that you buy to become a shareholder or a part owner of the company.
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What benefits can I derive from being a shareholder in a company?
Being a shareholder entitles you to a share of the profits of the company. As a shareholder, you are also entitled to dividends, bonuses and rights issues of companies in which you purchase shares. You can also participate in decision making at annual general meetings.
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What are dividends?
Dividends are part of a company's after tax profits that its board of directors decides to distribute proportionately to the shareholders. It could be done at different periods e.g. quarterly, half-yearly and yearly.
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What are bonus shares?
These are shares issued free of charge by a company to its existing shareholders usually in a mathematical proportion to the number of shares already held. What the company is actually doing is converting part of its accumulated profits and reserves into capital.
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What are rights issues?
This is when shareholders of an organization are given the right to buy shares not offered to the public usually at a price below the market price. The rights are offered to existing shareholders in proportion to the number of existing shares they have. For example two for three, means that they can take up additional two shares for every three shares they already have.
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What is an Annual General Meeting?
An Annual General Meeting is a meeting the company holds annually after the end of the company's financial year to unveil its results for the previous year to its shareholders. It is also an opportunity for shareholders to participate in the organization's decision making by electing directors, auditors, etc.
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What is ex-dividend (ex-div)?

Ex-dividend literally means without dividend. Ex-dividend price is the market price of shares after the amount equal to the recently declared dividends have been deducted.
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What is ex-dividend date?
Ex-dividend date is the date set by the stock exchange, on which the market price of a share is reduced by the dividend amount. Anyone purchasing the shares on that date or after would not be entitled to receive the upcoming cash dividend.
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How often do I get dividends and bonuses?
Normally, companies declare dividend once a year during their Annual General Meeting. However, some companies pay more than once with the payment of an interim dividend and final dividend. Bonus shares are usually issued less frequently.
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What is ex-rights?
This is a means that a price quoted for a share trading on a stock exchange does not include the right to take up a new stock offered or about to be offered through a rights issue. Usually the shares do not have the rights attached because they have expired, been transferred to another investor or have been exercised.
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What is ex-rights date?
Ex-right date is the date on which a buyer of a stock is no longer entitled to rights that has been declared.
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What is the process of investing in the Nigerian Capital Market?

Investment in the Nigerian Capital Market through the Secondary Market.

  1. Shares can be bought through the primary and the secondary markets.
  2. The secondary market transaction occurs when shares are bought through the Stock Exchange.
  3. Most times when shares are traded, they are done through the Exchange.
  4. Shares bought on the floor of The Nigerian Stock Exchange (NSE) are traded electronically and cleared through the Central Securities Clearing System (CSCS).
  5. The shares bought in the secondary market can be registered in two forms: Directly in the investors name or in a Nominee Name.
  6. For shares registered in the Shareholder’s name:
    1. Every shareholder must have an account opened for him or her in the CSCS. For every stockbroker you do business with, you will have an account. This account is called the Investor’s Account. However, every shareholder has a central identification (CSCS Number).
    2. Investment through the NSE is usually done through a Dealing Member of the NSE (Stockbroker). Every BUY or SELL transaction done by the stockbroker is confirmed by his Purchases or Sales Contract Notes respectively.
    3. Shares are traded into your CSCS Account and this is usually evidenced by the CSCS Statement of Stock Position.
    4. After the shares are cleared and settled through the CSCS, the Registrars are notified of the investment by the CSCS and they include the investors name in the Register of Members. This will entitle the investors to various benefits that may accrue to him or her as a shareholder.
    5. The more common benefits that may accrue to you as an investor are dividend and bonus shares. Since the shares are registered in your name and address, these benefits go directly to you, usually in form of dividend warrants or bonus share certificates.
    6. Indeed, the basic work of the stockbroker for which we are paid commission ends when your transaction is executed and your name enters the Register of Members. Consequently, you have to keep track of the benefits that should accrue to you. This may require occasional visits to the Registrar.
  7. For shares Registered in a Nominee Name:
    1. The shareholder signs a Nominee Agreement and will have an account opened for him by the Stockbroker.
    2. Investment through the NSE is usually done through a Dealing Member of the NSE (Stockbroker). Every BUY or SELL transaction done by the stockbroker is confirmed by his Purchases or Sales Contract Notes respectively.
    3. Shares are traded into a Nominee Account and is evidenced by the Stockbroker’s Statement of Stock Position which can be obtained any time.
    4. After the shares are cleared and settled through the CSCS, the Registrars are notified of the investment by the CSCS and they include the Nominee name in the Register of Members. Note that in the Register of Members, it is the Nominee Name that will be on record as the Shareholder though the ultimate Beneficiary is the Investor. The Nominee Name we use to hold our clients’ investment is WSTC Nominee Limited Clients' Account.
    5. The more common benefits that may accrue to you as an investor are dividend and bonus shares. Since the shares are registered in Our Nominee Name, these benefits come directly to us usually in form of dividend warrants or bonus share certificates.
    6. Under a Nominee arrangement, The Stockbroker keeps track of the benefits that may accrue to you as a Shareholder, credits the Clients’ account with such benefits when they become payable and may re-invest such benefits depending on the terms of the Nominee agreement.
    7. Under a Nominee arrangement, the Stockbroker monitors and manages your investment, tracks its performance and gives you a Valuation Quarterly.
    8. Our non-resident clients are saved the administrative problems of managing their shares by keeping them in a Nominee account with us. The Nominee account is usually recommended for Non-Resident investors and investors that require added confidentiality.
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Can I get a loan using my shares as collateral?
Yes.
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Can you give me a loan to invest in shares?
To help investors achieve their investment objective, we offer loans which could be used for the purchase of shares. The collateral for this facility would be the existing shares of the clients and/or the shares that are purchased with the loan.
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What kind of charges do I incur when I buy or sell shares?
When you buy or sell shares, you incur the following charges:

Purchase of shares

  1. Brokerage commission: - 1.35% of Consideration (negotiable).
  2. VAT: - 5% of brokerage commission
  3. SEC Fees: - 0.30% of consideration. (Consideration is the amount the investor wants to invest)
  4. CSCS Fees: - 0.06% of consideration.
  5. VAT: 5% of CSCS Fees
  6. Stamp duty: - 15 kobo on every N200 or part thereof (0.075% of consideration)
Sale of shares
    1. Brokerage commission: - 1.35% of Consideration (negotiable).
    2. VAT: - 5% of brokerage commission.
    3. CSCS: - 0.36%
    4. NSE: - 0.30%
    5. VAT: 5% on CSCS & NSE Fees
    6. Stamp duty: - 15 kobo on every N200 or part thereof (0.075% of consideration)
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What is a portfolio of shares?
A portfolio of shares is a combination of shares in various companies. These shares can be in different sectors i.e. Foods, Manufacturing, Banking, Petroleum, Conglomerates, etc. A portfolio helps a client reduce and spread the investment risk that could arise from the poor performance of a company or a sector.
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Can you help me build and manage my equity portfolio?
As your stockbroker, we give quality advice that help our clients choose stocks that could give them good returns. Portfolio management would involve us choosing stocks on your behalf. We would rely on our research, knowledge and expertise to help clients achieve superior returns on their investments. This we would do for clients at an agreed fee.
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How much do I need to begin to invest in shares?
There is really no specific amount of money you need to start investing in shares. However, some stockbroking firms have a minimum amount needed to open an account through them. Our minimum initial investment is N1,000,000 (approximately 4,000 pounds).
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How long do I need to invest, to get maximum returns?
Maximum returns can mean different things to different people i.e. some investors would like to be able to achieve 100% returns on their investment. The period of time to get this return cannot be clearly specified, but we believe that investors that take a long-term view of the market on stocks of good companies would invariably maximize their returns. However, there are opportunities for making short-term gains from price fluctuations.
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Can I lose money on the stock exchange?
Yes, an investor can lose money on the stock exchange as a result of investing in inappropriately priced/valued stocks. It is also possible for an investor who invests in performing stocks to lose money when there is a general fall in prices of stocks. In this case such loss in value is temporary, as such stocks do not lose their intrinsic value even when the prices fall.
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How do I start to invest through you?
To start to invest through us, you can contact the office for the account opening forms or download the forms from our website for completion. These completed forms are then sent to us and are processed. After establishing the KYC (Know Your Client) as appropriate, transfer instructions are given to the client or cheque received made payable to WSTC Financial Services Limited.
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