The word “shares” is used constantly in business news, investment conversations, and even casual talk about wealth. People speak of buying shares, selling shares, watching share prices, and earning dividends. But what does it actually mean to own a share? What are you really buying?
A share is not a lottery ticket. It is not an abstract financial product disconnected from the real world. A share is a piece of a real business — a claim on its assets, its profits, and its future. When you buy a share, you become a part-owner of a company, with all the rights and risks that ownership entails.
This Accra Daily Mail article explains what shares are, what you are actually buying, and what it means to be a shareholder. It is written for the ordinary Ghanaian who wants to understand the foundation of investing without the financial jargon.
Quick Facts
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A share is a unit of ownership in a company.
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When you buy a share, you become a part-owner of that company, entitled to a share of its profits and assets.
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Shareholders can earn returns through dividends — payments from company profits — and capital gains — increases in share price.
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Shareholders have voting rights on certain company matters.
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Shareholders are not personally liable for the company’s debts beyond their investment, in the case of limited liability companies.
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Share prices are determined by supply and demand on the stock market.
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Owning shares carries risk, including the possibility of losing part or all of your investment.
What a Share Is
A share is a unit of ownership in a company. A company is divided into a number of shares, each representing a fraction of the total ownership.
If a company has issued one million shares and you own one thousand, you own 0.1% of the company. That ownership is real. It gives you rights and, potentially, rewards.
Shares are sometimes called stocks or equities. In Ghana, shares are bought and sold through the Ghana Stock Exchange and through licensed brokers.
What You Are Actually Buying
When you buy a share, you are buying several things at once.
A Claim on Profits
Shareholders are entitled to a share of the company’s profits. When a company makes money, it can distribute some of those profits to shareholders in the form of dividends. The more shares you own, the larger your share of the dividends.
Not all companies pay dividends. Some reinvest all profits to grow the business. But the claim on profits is a fundamental feature of ownership.
A Claim on Assets
Shareholders have a claim on the company’s assets. If the company is sold or liquidated, shareholders are entitled to whatever remains after all debts and obligations are paid.
This claim is residual — meaning shareholders are last in line. Creditors, lenders, and other parties are paid first. In a liquidation, shareholders may receive nothing if the company’s debts exceed its assets.
A Say in Governance
Shareholders have voting rights. They can vote on important matters, such as the appointment of directors, major transactions, and changes to the company’s constitution.
The extent of voting rights depends on the type of share and the number of shares owned. In practice, small shareholders have limited influence, but the right exists.
A Share of the Future
When you buy a share, you are buying a stake in the company’s future. If the company grows and becomes more profitable, the value of your shares may rise. If it declines, the value may fall.
This is the essence of investing: you are making a judgement about the future prospects of a real business.
How Share Prices Are Determined
Share prices are set by the market. On the Ghana Stock Exchange, buyers and sellers place orders, and prices move based on supply and demand.
The price of a share reflects what investors are willing to pay for a piece of the company at a given moment. This willingness depends on many factors:
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The company’s current profits and future prospects
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The state of the economy
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Interest rates and inflation
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Industry conditions
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Investor sentiment and expectations
In the short term, prices can be volatile and may not reflect the underlying value of the company. In the long term, prices tend to track the company’s performance.
How Shareholders Make Money
Shareholders make money in two main ways.
Dividends
A dividend is a payment from a company’s profits to its shareholders. It is a distribution of value, not a creation of new value. When a company pays a dividend, its cash decreases, and the share price often adjusts downward by the dividend amount.
Dividends provide a stream of income. For investors seeking regular cash flow — such as retirees — dividends are often the primary attraction.
Capital Gains
A capital gain occurs when you sell a share for more than you paid. If you buy a share at GH₵10 and sell at GH₵15, your capital gain is GH₵5 per share.
Capital gains depend on share price appreciation. They are not guaranteed. Prices can fall as well as rise.
The Risks of Owning Shares
Owning shares is not risk-free. The risks are real and should be understood.
Price Risk
Share prices can decline. A company that performs poorly, or a market that turns bearish, can cause losses. If you sell at a lower price than you paid, you lose money.
Dividend Risk
Dividends are not guaranteed. A company can reduce or suspend its dividend if profits fall or cash becomes tight.
Company Risk
Companies can fail. A company that goes bankrupt may leave shareholders with nothing, as creditors are paid first.
Market Risk
The entire market can fall due to economic conditions, political events, or global shocks. Diversification reduces but does not eliminate this risk.
Inflation Risk
Inflation reduces the purchasing power of your money. If your returns do not keep pace with inflation, the real value of your investment declines.
The Difference Between Shares and Bonds
Shares and bonds are both securities, but they are fundamentally different.
A share is ownership. A bond is a loan.
When you buy a bond, you are lending money to a company or government. In return, you receive interest payments and, at maturity, the return of your principal. Bondholders are creditors — they have a prior claim on the company’s assets before shareholders.
Shares offer the potential for higher returns but carry higher risk. Bonds offer more predictable income but generally lower returns.
The Difference Between Shares and Other Investments
Shares vs Bank Deposits
Bank deposits are savings, not ownership. You lend money to the bank and earn interest. Deposits are generally safer than shares but offer lower returns.
Shares vs Treasury Bills
Treasury bills are short-term loans to the government. They are considered low-risk. Shares carry higher risk but offer the potential for capital gains and dividends.
Shares vs Real Estate
Real estate is a tangible asset. It can generate rental income and appreciate in value. Shares are more liquid — easier to buy and sell — but can be more volatile.
Each investment has its own characteristics. The right choice depends on your goals, risk tolerance, and time horizon.
What It Means to Be a Shareholder in Ghana
In Ghana, shareholders are part-owners of companies listed on the Ghana Stock Exchange or of private companies. Their rights are protected by the Companies Act and by the rules of the Securities and Exchange Commission.
Shareholders have the right to:
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Receive dividends when declared
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Vote at general meetings
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Receive information about the company
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Sell their shares
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Share in the assets if the company is wound up
Shareholders also have responsibilities. They should understand the companies they invest in, monitor their investments, and exercise their rights as owners.
Common Misconceptions
“Buying shares is like gambling”
Gambling is a zero-sum game of chance. Investing in shares is buying ownership in real businesses. The outcomes are uncertain, but the underlying activity is productive, not speculative — at least when investing for the long term.
“Share prices always go up”
No. Prices can fall. Some companies decline or fail. The long-term trend for well-managed companies may be upward, but there are no guarantees.
“Dividends are free money”
Dividends are a distribution of profits, not a creation of new value. The money comes from the company’s earnings and reduces its cash.
“I need a lot of money to buy shares”
You can start with a modest amount. The cost of a single share varies, and many brokers allow small investments.
“Shareholders can lose more than they invested”
For shareholders in limited liability companies, losses are limited to the amount invested. You cannot be forced to pay the company’s debts out of your personal assets, except in unusual circumstances involving personal guarantees.
Frequently Asked Questions
What is the minimum number of shares I can buy?
The minimum varies by company and broker. Some brokers allow you to buy as little as one share, while others have minimum purchase requirements.
How do I buy shares in Ghana?
Open a brokerage account with a licensed stockbroker, deposit funds, and place an order. The broker executes the trade on the Ghana Stock Exchange.
What determines whether I receive a dividend?
The company’s board of directors decides whether to declare a dividend, and how much. Shareholders on the record date receive the dividend.
Can I sell my shares whenever I want?
In general, yes, if there is a buyer. Some shares are less liquid than others, and selling may take time or require accepting a lower price.
What happens if the company I invested in goes bankrupt?
Creditors are paid first. Shareholders receive whatever remains, which may be nothing. This is why company risk matters.
How is my ownership recorded?
Shares in listed companies are held electronically in your securities account with a licensed depository or broker. You receive statements showing your holdings.
Do I have to attend company meetings?
No. You can vote by proxy — appointing someone else to vote on your behalf — if you choose not to attend.
What to Remember
A share is not an abstraction. It is a piece of a real business — a claim on profits, assets, and the future. When you buy a share, you become a part-owner, with the rights and risks that ownership carries.
The value of a share depends on the performance of the underlying company and the market’s assessment of its prospects. Prices can rise and fall. Dividends can be paid or suspended. The risks are real, but so are the potential rewards.
The next time you hear about shares, remember what you are actually buying: ownership. And ownership, wisely acquired and patiently held, is one of the oldest ways to build wealth.
Source: The Accra Daily Mail
Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of The Accra Daily Mail, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.
