An Investors should know before investing in unlisted securities?


Unlisted securities are shares in public or private companies not listed on an exchange licensed by the Financial Services Board (“FSB”) or not included in the list of securities to be kept by an exchange in terms of section 12(6) of the Securities Services Act, No.36 of 2004 (“SSA”) Trading in these securities takes place over-the-counter (“OTC”). It is also known as an Unlisted Securities Market.

the following guidelines will assist investors to make an informed investment decision

  • Investors should ensure that the company is reputable and is registered with the Office of the Registrar of Companies.
  • Establish in which assets the company invests (underlying investment portfolio).
  • Be aware of being offered spectacular returns. Remember if it is too good to be true, it usually is.
  • Never purchase any securities without first evaluating the fundamentals of the company and investors should carefully review the financial statements, management background and other data before making an investment decision.
  • Obtain a copy of the company’s prospectus.
  • Obtain information on the directors of the company and make sure that they are reputable persons who are fit and proper.
  • Study the products and services being rendered by the company and make sure the company is not an empty shell.
  • Make sure that the company exists by calling the company secretary and establishing whether it has a website.
  • Obtain information on the auditors of the company and discuss the future prospects of the company with them.

Study the media releases issued by the company.

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