1. Patrick van Beek Director/Consultant 5 July 2005
Dealing in Shares
Patrick van Beek
Director/Consultant
5 July 2005
5 July 2005
Dealing in Shares

2. Introduction What are Shares Shareholders Rights and Obligations
How shares are traded
Benefits to Shareholders
Benefits to the Company of Issuing Shares
5 July 2005
Dealing in Shares

3. What are Shares
Ordinary Shares are also known as common stock or equities
A security evidencing ownership interest in a company
Literally a share in the ownership of a Company
A security is an instrument issued by a corporation, government, or other organization which offers evidence of debt or equity
5 July 2005
Dealing in Shares

4. Shares - Example A company has issued 1,000,000 shares
Mr A owns 1,000 shares
Mr B owns 10,000 shares
Mr C owns 100,000 shares
5 July 2005
Dealing in Shares

5. Rights of Shareholders
Entitled to vote at shareholder’s meetings
Typically one vote per share
Elect board of directors
Common shareholders also receive voting rights regarding other company matters such as stock splits and company objectives
The board of directors is the group of individuals that represents the owners of the corporation and oversees major decisions for the company
5 July 2005
Dealing in Shares

6. Rights of Shareholders
Entitle the holder to a share of the company's success through dividends and/or capital appreciation.
In the event of liquidation, common shareholder have rights to a company's assets only after bondholders, other debt holders, and preferred stockholders have been satisfied
5 July 2005
Dealing in Shares

7. Pre-emptive Rights Shareholders sometimes enjoy "pre-emptive rights".
Pre-emptive rights allow shareholders to maintain their proportional ownership in the company in the event that the company issues another offering of stock. This means that shareholders with pre-emptive rights have the right but not the obligation to purchase as many new shares of the stock as it would take to maintain their proportional ownership in the company
Somewhat confusingly the term pre-emptive rights is sometimes also used to refer to the case where existing shareholders are restricted from transferring their shares eg other shareholders must be offered the shares before they can be sold to anyone else
5 July 2005
Dealing in Shares

8. Information
Shareholders generally have the right to certain information
Under Companies Act must receive annual return twenty-one days prior to annual general meeting (Section 155)
The Securities Industry Act greatly expands on information which must be sent to shareholders of public companies
A company must hold an annual general meeting every calendar year and within 15 months of the previous meeting (Section 107). Accounts must not be more than 6 months out of date when presented (Section 157)
5 July 2005
Dealing in Shares

9. SIA Information (1)
Financial Statements as prescribed by the Council must be sent within 4 months to security holders
Disclosure by Reporting Issuers Regulations
annual accounts, auditor’s report, director’s report within 6 months
Interim reports for first six months of year within 6 months
5 July 2005
Dealing in Shares

10. SIA Information (2)
Disclosure by Reporting Issuers Regulations – notify every holder of securities without delay
Major new developments
Significant acquisition/disposal of assets
Certain related party transactions
Substantial Shareholdings
Other information to GSC and GASCI
Major New developments which are not public knowledge and which information – is necessary to enable them and the public to appraise the financial position of the issuer and its subsidiaries; is necessary to avoid a false market in its securities; or would be likely to bring about a material change in the price of its securities. A person has a substantial shareholding in a company if they hold shares which entitles them to vote at least 10 percent of the unrestricted voting rights of the company.
5 July 2005
Dealing in Shares

11. Obligations Generally obligations of shareholders are limited
Must abide by articles and by-laws
Pay for shares which have been subscribed to
Agree to be abide by relevant laws and regulations
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Dealing in Shares

12. Share Trading Shares are traded in a variety of markets
Informal, private deals
Other the counter
Regulated exchange
In Guyana regulated exchange is operated by GASCI
All public companies are eligible for trading provided they are registered with the GSC
Following presentation will deal with the mechanics of trading
5 July 2005
Dealing in Shares

13. Types of Trading Quote driven Order Driven
Prices are set with respect to the prices market makers are prepared to deal at
Market markers will quote bid (price they will buy) and offer or ask (price they will sell) as well as volumes they are prepared to deal at
Order Driven
Prices are set with respect to trade prices
Trinidad was quote driven market until recently – prices could move without there being a trade
5 July 2005
Dealing in Shares

14. Disclaimer
GASCI nor any of its affiliates or any of their officers, directors, employees or agents makes any recommendation regarding any securities issued by any of the companies identified nor the advisability of investing in securities generally for any particular individual
5 July 2005
Dealing in Shares

15. Benefits (2) Superior Returns By way of Dividends Capital Returns
Current dividend yields of regularly traded companies range from 3.2% to 12.5%
Capital Returns
Not known in advance – hence shares are a risky investment
Over long periods most stock markets have shown positive real returns
Caribbean Markets exceptional over last two years
5 July 2005
Dealing in Shares

16. Capital Returns 5 July 2005 Dealing in Shares
Changes in market capitalisation of every share that has traded on GASCIs market
5 July 2005
Dealing in Shares

17. Dividends paid in last 12 months
Information
Stock Symbol
Last Trade
EPS
P/E Ratio
Dividends paid in last 12 months
Dividend Yield
Notes
NBI
21.9
2.1
10.4
0.83
3.80% 1
BTI 40
6.44
6.2
2.5
6.30%
CBI
13.3
5.7
2.3
0.9
6.80%
DIH 11
0.97
11.3
0.35
3.20%
1,3
JPS
4.47
1.5
CCI
-2.23
DTC
175
23.1
7.6
12.50%
GSI 15
1.56
9.6
0.68
4.50% 2
SPL
46.5
3.8
12.2
3.3
7.10%
DBL 3
0.36
8.3
0.12
4.00%
DDL 8
1.04
7.7
PHI 6
-0.03
16.70%
GTI
5.38
5 July 2005
Dealing in Shares

18. Issuing New Shares Companies may be reluctant to issue shares because
they may think that it dilutes the ownership
it requires them to disclose information about their business that they would not otherwise have to reveal
5 July 2005
Dealing in Shares

19. Benefits of Issuing
Obtain additional capital and increase the value of their business through public issue;
May be able to issue new shares to merge with or acquire other businesses.
Most important of all, they can reduce over dependence on bank borrowing which can be very risky
DIH share issue joint venture with Banks Holdings. Many private companies in receivership
5 July 2005
Dealing in Shares

20. Market Ready
Over 250 million Guyana Dollars traded on average each year in secondary market
Investors are looking for opportunities to invest
Companies are trading at between 6 and 12 times earnings after tax
Opportunity to unlock value to existing shareholders or raise new capital
One Energy – IPO followed by Rights issue – extremely high risk yet well received by the market
5 July 2005
Dealing in Shares

21. Questions?
5 July 2005
Dealing in Shares

22. Patrick van Beek Director/Consultant 5 July 2005
Dealing in Shares
Patrick van Beek
Director/Consultant
5 July 2005
5 July 2005
Dealing in Shares