Investing glossary
Plain-English answers to common questions about Nigerian shares, stockbrokers, dividends, CSCS accounts, and more.
A dividend is a portion of a company's profits paid out to registered shareholders, usually on a per-share basis, declared at the discretion of the company's board.
A CSCS (Central Securities Clearing System) account is an electronic account that holds your Nigerian shares as a dematerialised record, assigned to you under your CHN number.
A CHN (Central Holder Number) is a unique identification number assigned to every registered investor in the Nigerian capital market, linking them to their CSCS account and share records.
T+2 settlement means that a share transaction on the Nigerian Exchange is finalised two business days after the trade date. "T" is the trade date and "+2" means two additional business days.
A stockbroker is a licensed professional or firm authorised by the Securities and Exchange Commission (SEC) to buy and sell securities on behalf of investors on a recognised stock exchange.
Online share buying in Nigeria refers to purchasing NGX-listed shares through a regulated investment platform or stockbroker's digital channel, without visiting a broker's office in person.
The process that occurs after a share purchase on the NGX, including T+2 settlement, CSCS registration, and shareholder record updates.
Share registration in Nigeria is the process by which purchased shares are recorded in an investor's legal name in both the CSCS depository and the company's shareholder register, maintained by a registered company registrar.
An employee share scheme is a formal arrangement by which a company allocates shares — or rights to acquire shares — to some or all of its employees, typically as a form of compensation, long-term incentive, or ownership benefit.
The main types of employee share plans used by listed Nigerian companies are: Share Allotment Schemes (outright grants), Employee Stock Option Plans (ESOPs), and Share Incentive Plans (SIPs) — each with different mechanisms, vesting structures, and regulatory considerations.
An Employee Stock Purchase Plan (ESPP) is a scheme under which employees make regular payroll deductions that are pooled and used to purchase company shares on the stock exchange on their behalf.
Vesting is the process by which an employee's right to allotted shares becomes unconditional over time. Until shares vest, the employee cannot sell them and may forfeit them if they leave the company.
Equity compensation is a form of non-cash employee remuneration in which the employee receives shares (or rights over shares) in the company as part of their total reward package.
Payroll deduction investing is a method of automatically saving and investing money by having a fixed amount deducted from an employee's salary each pay period and used to purchase assets — typically company shares.
Dividend reinvestment is the process of automatically using dividend payments to purchase additional shares rather than receiving them as cash, compounding the total number of shares held over time.
Share allocation (or share allotment) is the formal act of issuing shares to a named recipient. In the context of employee share plans, it is the process by which a company issues shares to employees as part of an ESIS.
Employee ownership is any arrangement through which employees hold a financial stake in the company they work for — through shares, options, profit-sharing schemes, or co-operatives.
The price/earnings ratio (P/E ratio) compares a company's current share price to its earnings per share. It shows how much investors are paying for each unit of a company's annual profit.
An Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time by listing on a recognised stock exchange such as the Nigerian Exchange Group (NGX).
A share registrar is a company appointed by a listed business to maintain the official register of shareholders, administer dividend payments, process share transfers, and manage corporate action notifications.
Dividend yield is the annual dividend paid by a company expressed as a percentage of its current share price. It measures the income return an investor receives relative to the price paid for the shares.
The Central Securities Clearing System (CSCS) is Nigeria's central depository for electronically held share records. It maintains the official register of who owns which NGX-listed shares and issues each registered investor a unique Clearing House Number (CHN).
A rights issue is a corporate action in which a listed company offers its existing registered shareholders the right to purchase new shares at a specified price, in proportion to their current holdings, before those shares are offered to the general public.
An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time and lists on a recognised stock exchange such as the NGX.
A bonus issue (also called a scrip issue or capitalisation issue) is when a listed company distributes additional shares to its existing registered shareholders free of charge, in proportion to their current holdings, by converting balance sheet reserves into issued share capital.
Market capitalisation (market cap) is the total market value of a company's outstanding shares at a given point in time. It is calculated by multiplying the current share price by the total number of shares in issue.
The price-to-earnings ratio (P/E ratio) is a valuation metric that compares a company's share price to its earnings per share (EPS). It is calculated by dividing the current share price by the annual EPS.
A share registrar is a regulated company appointed by a listed corporation to maintain its official shareholder register — the authoritative record of who owns how many shares, what each shareholder's contact details and bank details are, and when share transactions occur.
The NGX All Share Index (ASI) is the main benchmark index of the Nigerian Exchange Group (NGX). It tracks the price performance of all domestic ordinary shares listed on the NGX and is the most widely cited indicator of overall Nigerian stock market performance.
Dividend yield is the annual dividend paid per share expressed as a percentage of the current share price. It measures the income return you receive from a share's dividends relative to what you pay for the share.
A share transfer form is a legal instrument used in Nigeria to authorise the transfer of registered share ownership from one person or entity to another, or to move shares between CSCS broker accounts.
Withholding tax (WHT) is a tax deducted at source from certain payments — such as dividends, rent, and contract fees — before the income reaches the recipient. For Nigerian dividend investors, WHT is deducted from dividend payments by the company or its registrar before the net amount is credited to the shareholder.
Capital gains tax (CGT) is a tax charged on the profit — the capital gain — that arises when you dispose of an asset for more than its original cost. In Nigeria, CGT is governed by the Capital Gains Tax Act.
The Securities and Exchange Commission Nigeria (SEC Nigeria) is the apex regulatory body for Nigeria's capital market. It is established under the Investments and Securities Act and is responsible for regulating and developing the Nigerian capital market, protecting investors, and maintaining fair, efficient, and transparent market conditions.
Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals — for example, monthly — regardless of the current share price. When prices are lower, the fixed amount buys more shares; when prices are higher, it buys fewer. Over time, this results in an average purchase cost that smooths out the effect of short-term price fluctuations.
Portfolio diversification is the practice of spreading investments across multiple different assets, companies, or sectors — rather than concentrating all investment in a single holding. The goal is to reduce the overall risk of the portfolio by ensuring that poor performance in any one investment has a limited impact on the whole.
An Annual General Meeting (AGM) is a formal yearly meeting of a company's shareholders, required under the Companies and Allied Matters Act (CAMA) for all Nigerian companies including NGX-listed companies. It is the primary forum at which shareholders exercise their rights to vote on key company decisions, receive information about the business, and hold the board accountable.
Shareholder voting is the process by which the owners of a company's shares exercise their right to vote on resolutions put to a general meeting. Voting weight is proportional to the number of shares held — each ordinary share typically carries one vote.
A rights entitlement (also called a provisional allotment) is the right given to an existing shareholder to subscribe for a specified number of new shares in a company's rights issue, at a set subscription price, in proportion to their current shareholding. Entitlements are calculated as at the record date from the CSCS register.
Shares Saver lets you buy and own NGX-listed shares directly in your name through regulated broker execution.