With smaller dealing costs, trading in shares can be a good way to make a return on your money. Dealing costs can really diminish the amount of your investment returns.
What is a share?
A share is a single unit of ownership in a company. It is one of the equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits. When an individual buys shares, he or she buys a stake in a business. Companies mostly sell shares because they need to raise capital.
How to become a shareholder:
Looking to buy shares and become a shareholder in any listed company on the Uganda Securities Exchange? You have to visit one of the licensed stock brokerage firms and open a Security Central Depositary (SCD) Account. The licensed stock brokerage firms include custodian banks such as
Stanbic Bank Uganda LtdHousing Finance Bank LtdKenya Commercial Bank Uganda LtdStandard Chartered Bank LtdBank of Africa Ltd
The core mandate of the SCD is to provide centralized depository, clearing and settlement services for the Ugandan equity and debt markets. The SCD account is free and there are no monthly or annual charges. To open an SCD account, you need:
A valid ID (preferably national ID for Ugandans)3 passport photos.
How do you buy Shares in Uganda?
As an investor wishing to buy shares through the USE, you must approach your stock broker and express your desire to buy shares of a given listed company. Your Stock broker will provide you with details of the trust account specifically opened by the stock brokers to keep investor’s money intended for USE transactions. You will then deposit the money of any amount into the trust account. It is a requirement of the USE that for local orders, payment is made upfront by the investor. Your stock broker will then post the order (bid) on the Automated Trading System (ATS) during trading hours. When the bid matches an offer (an order to sell) by either the same stock broker or other stock brokers, then the transaction is considered to have been concluded. Your Stock broker will then credit the shares to your SCD account. Now that you know how to buy shares in Uganda, pick up your shareholder party hat and walk to a stock brokerage firm of your choice.
