LUSAKA STOCK EXCHANGE

Lusaka stock exchange (LUSE) was opened on 21st February 1994 as a non-profit organization limited company




The stock exchange is a highly organized market shares and other securities are bought and sold

Functions of the stock exchange

  • Provide a market where stocks, shares can be sold or bought
  • Enable companies to raise their capital required by offering shares for sale to the public
  • Compensate members of the public defrauded by dealers
  • Provide rules that protect investors against fraudulent acts by some licensed members of the stock exchange
  • Enables the government to raise loan capital requirements to build schools, hospitals etc




  • Publish prices at which shares are traded at the stock exchange
  • Provide the exchange of second-hand securities
  • Give some indication to investors that a company quoted is reputable
  • Establishes prices for shares based on supply and demand
  • Prepare reports and data concerning all organizations on stock exchange and how they are trading

REASONS/PURPOSE FOR THE ESTABLISHING OF LUSAKA STOCK EXCHANGE.

  • To promote and encourage private sector enterprises and initiative
  • To facilitate raising of capital by companies
  • Through the sale of shares for new companies
  • To facilitate secondary trading of shares and other securities




  • To help in the process of privatization of companies
  • To enable broad and wide share ownership
  • To help in e valuation and pricing in investment
  • To develop and establish a securities exchange in Zambia

FUNCTIONS OF THE LUSAKA STOCK EXCHANGE

  • Provide a source of cheaper, long term capital for existing and new companies
  • Encourage investment and the growth in industries and commerce in Zambia
  • Provide an opportunities for the Zambian people to share in the success of private enterprises and the privatizes parastatal companies
  • Facilitate the privatization of the states owned companies
  • Promote private sectors initiative and create a free market system




  • Promote wealth creation though wide ownership of shares by Zambian citizen
  • Provide and efficient and orderly in shares and other marketable securities

HOW LUSE FACILITATE SECONDARY TRADING

  • By allowing the selling and buying of shares of profit
  • By allowing investors to buy shares when they are low and sell them when they are at a high price
  • By enabling people/companies to sell shares when the prices are high and buy the shares when they low
  • By permitting the buying in newly formed companies of shares at normal values and resale them when the price is high

LISTED COMPANIES ON LUSE




  • These are companies which are admitted to the financial list of LUSE controlled by the securities and the exchange commission (SEC) and LUSE Regulations
  • Whose shares are available to the general public through LUSE
  • Shares in these companies are freely transferable
  • Such companies must operate in transparent manner,
  • And shows good corporate governance
  • Must treat all shareholders equally

ADVANTAGES OF SHARE HOLDERS IN LISTED COMPANIES

  • Listing improves the liquidity of shares
  • Shareholders benefit from several tax exemptions i.e no capital gain tax
  • Companies income tax is reduced
  • There is no property transfers tax
  • Improve and enhance the image to the company
  • Many prayers of the Lusaka Stock Exchange

Stock Brokers




  • Acts as an agent
  • Buy and sell shares on behalf the general public
  • Endeavoring to obtain the best possible prices for his clients
  • He is remunerated by a commission
  • Advise buyers and sellers on a particular type of shares to buy or sell
  • Takes care of all the details required to complete the process of buying and selling shares at the stock exchange
  • Compares prices in the market and will then buy or sell according to his clients instructions, then prepares a contract note

Dealers

  • Are the principles
  • Buy and sell shares and stocks on own behalf
  • Deals only with stock brokers with a view of making profit
  • May specialize in a certain type of shares or securities e.g. dealing in mining shares
  • Prepare documentation e.g. contract note when a deal to buy or sell share sis concluded.




BUYING AND SELLING OF SHARES AT THE LUSE

  • Members of the of the public are not allowed to deal directly with the Lusaka Stock exchange hence they should contact a licensed stock broker who is a member of the stock exchange
  • First step is to contact a one of the stock brokers and he/she will advise you on particular shares to buy or sell and which company
  • When buying of selling shares you should open an account with the stock broker
  • Once an account is opened, a person may buy or sell shares through a broker with whom an account has opened
  • If a person is selling shares, the broker will demand that a client’s shares certificate be deposited in the account opened with him before he could place an order to sell them
  • Three days after the sale of shares, the shares are transferred to the account of a new buyer, and then the broker must receive money for shares sold so that he is able to pay his clients whose shares were sold




  • If a person is buying shares, he/she must pay for money for shares to the broker in advance so that the broker is in position to pay for shares three days after the shares have been bought. When the buyer of the shares ask for a shares certificate with the shares registered in him/her name the Lusaka Stock Exchange charges a fee for arranging a certificate to be issued.
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