This article will focus on the legal and practical process of purchasing shares in Kenya. We will discuss how to buy shares, what it takes to be eligible for share ownership, the risks of being a shareholder, and other general information about Kenyan stocks.
What are shares, and how do they work?
Shares are a legal mechanism that entitles the shareholder to a share of ownership of any given company. The key term here is ‘share,’ which means that all owners have agreed to give up a certain percentage of their earned profits and divide it evenly. This means that shareholders who own 5% of the company will receive 5% of the total profits and, in some cases, also benefit from voting rights.
In Kenya, you can buy shares at licensed stockbrokers, An online broker, or an investment manager or financial adviser. They work by allowing investors access to substantial returns on their investment and helping boost local economies through job creation through domestic investment.
What do you need to start buying shares in Kenya?
To trade on the Nairobi Stock Exchange, you will need a valid Kenyan ID or passport, your address in Kenya, an income source within Kenya, cheques for linking with a bank. You will also need to open a CDS account at a stockbroker to buy and sell securities.
How to buy shares in Kenya in 2021
Now that you know what you need to buy shares in Kenya, follow these steps to get started in buying shares in Kenya:
Step 1: Locate the broker or agent you want to use and fill in a securities application form.
Step 2: Once approved, the stockbroker will help you open a Central Deposit and Settlement account known as CDS Account. You can also open a CDS account from your bank.
Step 3: The stockbroker will give you market rate information on various listed securities and help guide you through the best shares to buy in Kenya 2021 based on risk appetite determined by the level of experience and financial means.
Step 4: You are all set to buy and sell shares on the NSE (Nairobi Stock Exchange). However, you will need to deposit a minimum of Ksh 5,000 into your CDS account to start purchasing shares.
How much do I have to buy?
This question is an easy one because it only depends on how much you can afford. The law requires that every shareholder be informed about the number of shares they hold. They also have the right to request detailed information concerning their holdings at any time during trading hours, provided conservative documents are provided. In addition, banks help with loans when opening a new CDS account, and if your shareholding is high enough, you can get a loan.