WHAT IS A STOCK EXCHANGE
A stock exchange is a market where large and small investors can buy and sell shares and other securities. In Malawi's case this includes Malawi Government treasury bills and local registered stock (bonds). The price of stocks and shares varies according to supply and demand. It is a market through which companies, government and local authorities can raise funds for expansion and development by issuing new shares or stock to the public.
WHAT IS A SHARE?
A share is a unit of ownership. When you buy a share you become a part-owner, a "shareholder" of a business and you will be involved in certain decisions regarding the business's future and share in its profits.
Because shares are traded on the Exchange during every working day, you can buy or sell whenever you wish.
Equities, or ordinary shares, are issued by companies and represent the money which shareholders (as owners of the business) originally put into building up the business.
Between them, holders of ordinary shares own the company. They are entitled to vote on company policy, appoint and dismiss directors and if the company makes a profit they are entitled to a share of it.
BECOMING A SHAREHOLDER
There are basically two ways to become a shareholder.
- BUYING NEW ISSUES OF SHARES
A company that wants its shares traded on the exhange for the first time must advertise in the papers and issue a "prospectus" outlining details of the sale .Anyone who wants to buy a new isssue simply fills the application form included in the "Prospectus", and sends it (with a cheque) to the given address
- BUYING EXISTING SHARES
Investors are not limited to participate in new issues only -in fact the Exchange's main function is to allow existing shares to be bought and sold at any time. As members of the Exchange, stockbrokers buy and sell on behalf of their clients, whether they are private individuals or large institutions