The shares of Belarusian and foreign companies are of interest to private investors as a source of investment and income. To purchase and sell shares on the stock exchange market, a representative is needed who will make transactions on behalf and at the expense of a private client or on his own behalf and at the expense of the client. In some cases, transactions with shares are possible outside the exchange.
What are promotions
Shares are registered securities. They indicate the contribution of the holder of shares to the authorized capital of the joint—stock company – the issuer of shares. The issuer of shares is a joint—stock company that issued them. Shares are issued for an indefinite period in an undocumented form. This means that the shares have no expiration date and they look like a certain entry in the register of shareholders, and not like a document on paper. The share certifies the extent of the owner’s rights, depending on its category: simple (ordinary) or preferred. Preferred shares have the types defined in the charter of the joint-stock company (paragraph 2 of Article 1 of the Law of the Republic of Belarus dated 05.01.2015 No. 231-Z “On the securities market”).
What rights are given to owners of different types of shares
A simple (ordinary) share certifies the following rights of the owner:
- Receive a part of the profit of the joint-stock company in the form of dividends.
- Participate in the general meeting of shareholders with the right to vote.
- Receive a part of the property or its value upon liquidation of the joint-stock company.
The preferred share certifies the following rights of the owner:
- Receive a part of the profit of the joint-stock company in the form of a fixed amount of dividend.
- Receive a part of the property or its value upon liquidation of the joint-stock company.
A preferred share does not give the owner the right to participate in the general meeting of shareholders with the right to vote, except in cases provided for by legislative acts.
The types of preferred shares differ, for example, in the size of the dividend, the timing of its payment, etc.
The joint-stock company is obliged to distribute a part of the profit in the form of dividends among the owners of preferred shares, except for some exceptions.
The joint-stock company has the right to distribute dividends among the owners of ordinary shares.
Features of transactions for the purchase and sale of shares
Owners of shares can buy and sell shares only on the stock exchange. To do this, representatives are needed at different stages of transactions: brokers, trust managers.
On the OTC market (not on the stock exchange), in particular, the following transactions with shares are concluded:
- On the repurchase by a joint-stock company of its shares at the request of shareholders.
- On the purchase by a joint-stock company of its shares by decision of the general meeting of shareholders.
- On the sale by a joint-stock company of its shares to members of the board of directors (supervisory board), executive body, employees.
- Sale by the issuing joint-stock company of its shares to the investor on the terms of the issuer’s business plan.
What you need to buy and sell shares on the stock exchange
For share purchase and sale transactions, a contract is concluded with a broker. The contract specifies the number of the bank account for crediting money when selling shares. The broker can pay the amount from the sale of shares in cash or make a bank transfer to his or another bank. In this case, the seller of shares does not need to open a bank account.
When buying shares, a commission agreement is concluded with the broker, then they open a bank account, where they deposit the amount for the purchase of shares, transfer this amount to the broker’s bank account.
Bank transfer and cash withdrawal operations may be paid for by the stock seller.
The seller or buyer of shares also enters into an agreement with the depository, where a savings account “depot” is opened in the name of the owner of the shares to account for the shares.
To conclude a contract with a depository, you need to write a written application for opening a depot account, bring the passport of the owner of the shares and fill out a card with signature samples.
When selling shares, the depository is given an order to block shares for trading on the stock exchange, where information about the broker participating in the exchange trades is indicated.
What does the authorized representative of the owner of the shares do
The owner of the shares may give the broker the right to be an authorized representative of the owner of the shares:
- to conclude an agreement with the depository on behalf of the owner of the shares,
- to transfer to the depository orders to block the shares for their sale on the stock exchange.
Dispose of the “depo” account or a section of this account under a separate agreement that the owner of the shares enters into with the broker. In this case, the broker becomes the operator of the “depo” account (a section of this account).
The broker becomes the authorized representative of the owner of the shares after the owner of the shares issues a power of attorney to the broker. A power of attorney issued to a broker does not necessarily need to be notarized, although it can be done. The power of attorney can be certified by the organization where the owner of the shares works, studies, the Housing and communal services or the owners’ association at the place of residence of the owner of the shares, the administration of the medical institution where the owner of the shares is being treated.
How we can be useful in representing the interests of private clients on the purchase/sale of shares
Our lawyers and attorneys are experienced specialists in the field of securities transactions on behalf of private clients and speak English. We can:
- Advise you on the disposal of your shares;
- Draw up the necessary documents for you to purchase or sell shares on the over-the-counter market;
- Help you find a stock broker to buy/sell shares on the stock exchange;
- Prepare or check the documents provided to you by the broker;
- Represent your interests when concluding an agreement with a broker, with a depository.
Contact us
If you have any questions about representing the interests of private clients on the purchase / sale of shares — we will be happy to help you! Our long-term experience in representing the interests of private clients when concluding transactions with shares on the stock exchange and the OTC market will help you in resolving any situations in this area.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@ambylegal.by.
