Market
Equity Securities
Overview
Equity securities represent ownership in a company. Investors in equity securities become part-owners of the company, entitled to a share of the company’s profits (dividends) and, in some cases, voting rights.
Equities are generally more volatile than debt securities but offer higher returns in the form of capital gains or dividends. There are several types of equity securities issued in Ghana.
Ordinary Shares
Description
These represent the most common form of equity security, giving shareholders a claim on the company’s profits and assets.
Dividends
Ordinary shareholders receive dividends if declared by the company, but they are paid after preference shareholders.
Voting Rights
Ordinary shareholders typically have voting rights in company decisions, such as the election of directors.
Preference Shares
Description
A type of equity security that gives shareholders priority over ordinary shareholders when it comes to dividend payments and liquidation of assets.
Dividends
Preference shareholders are entitled to receive dividends before ordinary shareholders, and the dividend is often fixed.
Voting Rights
Preference shareholders usually do not have voting rights, except in certain circumstances like non-payment of dividends for a specified period.
Liquidation
In case of liquidation, preference shareholders have a higher claim on company assets than ordinary shareholders.
Exchange-Traded Funds (ETFs)
Description
ETFs are investment funds that are traded on the stock exchange like ordinary shares, but instead of representing ownership in a single company, they track the performance of a basket of assets, such as shares, bonds, or commodities.
Purpose
ETFs provide investors with a way to diversify their portfolios by investing in a collection of assets without needing to buy each asset individually.
Example
NewGold ETF, issued by ABSA Capital in 2012, is an ETF that tracks the price of gold and is traded on the Ghana Stock Exchange.
