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GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
Dealing in Shares
Patrick van Beek
Director/Consultant
5 July 2005
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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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
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
Proportion of
Company owned
Mr A
Mr B
Mr C
Others
GASCI Rights of Shareholders
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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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
5 July 2005
Dealing in Shares
GASCI Rights of Shareholders
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
• 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
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
Types of Trading
• Quote 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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
GASCI
Benefits (2)
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
• Superior Returns
– By way of Dividends
• 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
GASCI
Capital Returns
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
van Beek Index (vBI) - % change since inception
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Jul-03
-10.0%
Oct-03
Jan-04
May-04
Aug-04
-20.0%
(C) CAFS 2005
5 July 2005
Dealing in Shares
Nov-04
Feb-05
Jun-05
GASCI
Information
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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%
1
DIH
11
0.97
11.3
0.35
3.20%
1,3
JPS
4.47
1.5
CCI
-2.23
0
DTC
175
23.1
7.6
21.9
12.50%
GSI
15
1.56
9.6
0.68
4.50%
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
0.36
4.50%
PHI
6
-0.03
1
16.70%
5 July 2005
GTI
5.38
Dealing in Shares
0
2
1
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
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
5 July 2005
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
5 July 2005
Questions?
Dealing in Shares
GASCI
THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
Dealing in Shares
Patrick van Beek
Director/Consultant
5 July 2005
5 July 2005
Dealing in Shares