Know your rights as a shareholder

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‘Investing in the Stock Market’ is brought to you by Business Observer and the Colombo Stock Exchange. - Part 8

Buying a stock means ownership in a company and ownership gives you certain rights. As a shareholder, knowing your rights is an essential part of being an informed investor. Although the regulatory bodies attempt to enforce a certain degree of shareholder rights, a well-informed investor who fully understands his or her rights is much less vulnerable to risks.

As a shareholder, you may need to make decisions about taking up various rights and benefits offered by the companies you have invested in. In each case, you should keep your investment goals and strategy in mind and consult an adviser.

Annual General Meeting (AGM): CSE-listed companies conduct an AGM where shareholders vote on electing new directors to the board and other resolutions relating to the company’s business. The Chairperson of the board and company Chief Executive Officer usually address the meeting. You will be sent a notice of the meeting outlining when and where the AGM will be held. For many investors the AGM is a good opportunity to hear what the senior management has to say.

Reports and information: CSE-listed companies issue annual and interim (and sometimes quarterly) financial reports to shareholders. Reading these reports is a good way to keep in touch with the company’s business and future prospects.

Corporate actions: From time to time, companies can re-organise their business and shares on issue. This might be a merger with another company or a de-merger of the existing business into a separate businesses. These can be complex and they can affect the share price and distribution. You should consider consulting an adviser before making a decision. A company may make a share offer to existing shareholders, for example a rights issue. The details of the offer will be sent to you by the company. It will explain eligibility and how to make a payment if you wish to take up the offer.

Time for your final step

Experience is one of the best teachers and as an investor you will learn from both your successes and mistakes.

The first thing to do is contact a stockbroker. You do not have to start trading, but setting up a CDS account is useful. Next, keeping up to date with the market is a great way to build your knowledge and confidence.

How to find out more about CSE. There are many sources of investor education, both for the novice and the more experienced investor.

The CSE Website (visit:www.cse.lk)

Publications of the Colombo Stock Exchange

CSE Daily, Weekly, Monthly and Quarterly

Data Library

Annual Report of the Colombo Stock Exchange

Social Media: CSE Twitter, Facebook and Linked In pages

CSE Android and iOS Mobile Apps

CSE Educational Portal (visit www.cse.edu.lk)

Seminars and workshops conducted by the CSE

Branches of the Colombo Stock Exchange - Matara, Kandy, Kurunegala, Negombo, Jaffna, Anuradhapura, Hambantota and Ratnapura.