Shares and dividends in Kenya

What do shares represent?

Shares and dividends in Kenya represent units of ownership in a corporation or financial asset owned by investors or customers who exchange capital in return for this units while dividends are the portion of a company’s profits that are distributed to its shareholders. They are typically paid out in cash, although some companies may offer stock dividends (issuing additional shares) as an alternative

In Kenya, shares and dividends operate in a manner similar to many other countries.

At www.rg.co.ke 1 share is equivalent to 100 Kenya shilling.

How shares and dividends operate:

Shares;

1. Ownership:

Usually, shares represent ownership in a company. When you purchase shares of a company, you will become a shareholder, which means you have a partial ownership stake in that company.

2. Stock Exchanges:

In Kenya, the main stock exchange is the Nairobi Securities Exchange (NSE). It is a platform where shares of listed companies are traded. Companies can choose to list their shares on the Nairobi Securities Exchange to allow investors to buy and sell them.

3. Buying and Selling:

To buy shares, you can open an account with a stockbroker who is a member of the Nairobi Securities Exchange. Once your account is set up, you can place orders to buy shares through your stockbroker. Similarly, if you wish to sell shares you own, you can place a sell order through your stockbroker.

4. Share Prices:

Share prices can fluctuate based on various factors, including the company’s performance, market conditions, and investor sentiment. Shares are categorized as ordinary shares, preference shares, or other types, each with its own characteristics and rights.

Dividends;

1. Declaration: Companies declare dividends based on their financial performance and the discretion of their board of directors. Dividends are usually announced on a per-share basis, such as a specific amount per share or as a percentage of the share’s face value.

2. Payment

: Once dividends are declared, the company can set a record date, which is the date on which shareholders must be registered in the company’s books to be eligible to receive the dividend. Therefore, after the record date, the company processes the dividend payments and distributes them to eligible shareholders.

3. Taxation

Dividends in Kenya are subject to withholding tax. For instance, the rate of withholding tax may vary depending on whether the recipient is an individual or a corporate entity. The company is to deduct the applicable tax amount from the dividend payment before distributing it to the shareholders.

It’s important to note that this is a general overview, and specific rules and regulations may apply. In conclusion, if you’re interested in investing in shares or receiving dividends in Kenya, it’s recommended to consult with a financial advisor or stockbroker who can provide you with accurate and up-to-date information based on your specific situation.

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