By Coreen Madanha
To begin this journey of ownership, one must first understand what exactly they are buying. This week, as we progress in unlocking the market, we focus on a key step in executing the ‘From Acorn to Oak: The Strategy of Ownership.’ This week, we explain the foundational concepts of shares, equity, and the powerful rights and rewards that come with owning a piece of a Zimbabwean listed company.
The Foundation of Ownership
A share is simply a slice of cake from the company’s total ownership. When a company lists on an exchange, it divides its total value into these small, purchasable units.
Equity: This is another word for ownership. If you own shares, you hold equity. Unlike lending money (debt), equity means you are a permanent owner of the company’s assets and future profits.
The Rights and Rewards of a Shareholder
When you buy a share, you gain fundamental investor rights that are protected by the law and by the Securities and Exchange Commission of Zimbabwe. These rights come with two primary potential rewards:
Income Reward (Dividends): Dividends are payments made to you, the shareholder, from the company’s profits. This is the money the company pays you just for being an owner. It is your reward for investing your capital in their business.
Capital Growth (Appreciation): Capital Appreciation means the price of your share goes up over time. Practical Example: If you bought a share for ZWG$10 and its price increases to ZWG$15, the ZWG$5 increase is your capital appreciation. It means your initial money is growing!
The Right to Vote (Governance): You have a voice. You can vote on important decisions at the Annual General Meeting (AGM). Practical Example: If you own shares in Cake Ltd, you are entitled to attend the AGM and vote on matters like hiring a new CEO or approving a major business move.
The Right to Residual Claim: If the company ever closes, you are entitled to a piece of what’s left after all debts are paid.
The Right to Information: You have the right to get timely, honest information about the company’s financial performance.
By understanding your rights and the rewards, you transform from a passive saver into an active participant in Zimbabwe’s economy.
To ensure the growth of your Acorn is safe and regulated, our next port of call is the crucial structure that protects these rights: the roles played by the regulators and exchanges in the Zimbabwean capital market ecosystem.
Coreen Madanha is the Managing Director for InvestIQ Oak Wealth (Private) Limited, which is a registered member of the Zimbabwe Stock Exchange (ZSE) and is licensed by the Securities and Exchange Commission of Zimbabwe (SECZ).
