This year 2024, some Nigerian Banks offered shares to the public through an Initial Public Offering (IPO).
But before you jump into this investment opportunity you must first understand WHO A SHAREHOLDER IS
A shareholder, also known as a stockholder, is an individual, company, or institution that owns one or more shares of a company’s stock.
Shareholders have invested in the company by purchasing its shares, and in return, they receive a portion of the company’s assets and profits.
Under the Companies and Allied Matters Act (CAMA) 2020 in Nigeria, shareholders have rights subject to the company’s articles of association and any other applicable laws.
So what should you consider before buying shares from a Bank?
Before buying shares from any bank, consider the following:
1. Shareholder rights: Understand your rights as a shareholder, including voting rights, dividend entitlement, and access to information.
2. Share certificate authenticity: Verify the genuineness of the share certificate and ensure it’s issued by the bank or its authorized agent.
3. Transfer restrictions: Check if there are any restrictions on transferring shares, such as lock-in periods or approvals required.
4. Shareholder agreements: Review any existing shareholder agreements or arrangements that may impact your rights.
5. Bank’s financial health: Assess the bank’s financial stability, credit rating, and regulatory compliance.
6. Regulatory approvals: Ensure the bank has necessary approvals and licenses to issue shares.
7. Share price manipulation: Be cautious of artificial share price inflation or manipulation.
8. Disclosure requirements: Verify the bank’s compliance with disclosure requirements, such as financial statements and material information.
9. Shareholder disputes: Understand the process for resolving shareholder disputes and accessing dispute resolution mechanisms.
10. Tax implications: Consider tax implications of buying and holding shares, including capital gains tax and dividend tax.
11. Share buyback schemes: Be aware of any share buyback schemes or arrangements that may impact your shares.
12. Bank’s governing documents: Review the bank’s Memorandum and Articles of Association or equivalent governing documents.
Please consult a legal practitioner and, a financial advisor to ensure you’re adequately protected and informed before making any share purchase.
