FAQ

What is a share?

A unit of ownership in a corporation that represents an equal proportion of a company's capital. It entitles its holder (the shareholder) to an equal claim on the company's profit/loss.

What are the benefits of investing in shares?

  • Possibility of getting high return in the form of dividend and capital gain
  • Shares can be mortgaged for a bank loan
  • Shares can be easily transferred to a relative as a gift or inheritance
  • A chance of becoming part of company's shareholders-right to attend AGM and vote
  • Undisputed evidence of ownership-Depository receipt
  • Requires less administration costs and time to run

What is the minimum number of shares one can buy?

On Secondary market a minimum number of shares an investor can buy is 10 shares depending on the price of shares. Investors can buy as many shares as possible.

If something wrong happens to my shares, Can I be compensated?

No, risk moves with ownership, Share price can go up or down depending on several factors. Such uncertainty (risk) is there from the day you decide to invest in shares. In case you lose your share certificate, you are advised to report it to the nearest police station to obtain a police report to be submitted to the company secretary immediately.

Can I use my shares as collateral?

Yes, financial institutions in Tanzania are increasingly accepting shares, particularly of listed companies, as collateral for loans, The Central Depository System based process to mortgage shares has proved beneficial to both lenders and borrowers as it is not time consuming, it is transparent, no valuation costs are incurred and the chances for forgery are very minimal.

Can a company in which I have shares lend me against my shares?

No, normally listed companies do not have arrangements to lend to shareholders against their shares. If you want cash two options are available. One is to approach a lending institution and apply for a loan, in which case you will generally be able to use your shares as collateral; or to sell your shares, in which case you should contact a DSE broker / dealer such as Tanzania Securities ltd.

If the investor dies, what will happen to his/her shares?

Shares are assets like any other asset (house, plot, car etc), which are transferable and inheritable. Dependants of a deceased person are entitled to inherit securities owned by the deceased according to the Will or the governing law.

Is there any fixed amount set for dividends?

No, ordinary shares do not have fixed dividend amounts. The amount of dividend depends on the performance of the company as well as the dividend policy set by the company. Dividend policy if any is usually available in the company's prospectus during the Initial Public Offer (IPO).

What do I get as an evidence of holding shares?

After buying shares an investor will receive a Depository Receipt that is issued by the Dar es Salaam Stock Exchange (DSE) on settlement date. The Depository receipts shows among others the name of the holders, the name of equity and number of shares.

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