Investing can be real exciting if you study hard enough of the company. There are some points that as an investor needs to understand before making the move. The following blog are some made to simple understanding before investing:
Point 1: Who is the issuer?
Do make study on who is the issuer, are they having the genuine company with address and it's registration number with Registrar of Company (SSM). You are allow to print out the company details at RM 5 per set of company incorporation documents and from there you can check the total PAID-UP & authorized capital, it's activities and the registered directors.
Point 2: The background of the issuer.
What is the company's historical background and it's strength in economic scale. It's suspicious if the company is specialized in education but promoting landscaping business.
Point 3: The terms of offer.
Why the company is seeking to raise it's shares, its subscription price and the percentage of shareholding. Some companies offer RM 30,000 per tranche with only 0.060% per tranche.
Point 4. Usage of proceeds.
From the selling of shares, where is the proceeds go. Do identify it before investing and do homework, is the project workable? For example, the company is not a construction company but the proceed written as building a tunnel!
Point 5. Dividend policy.
What is the policy of giving dividends after its net earnings. It is good that the company declare up to 50% of its net earnings as dividend every year but however it is often written as subject to company's performance.
Point 6. The rights of transfer of shares.
Will the issuing company provides a total buy back of the shares in case of the selling wish to sell or can they sell to 3rd party with the blessings from the issuing company. Some companies make it hard for share sellers to sell..as they are loaded with terms and conditions.
Point 7. Information rights.
The review of information to shareholders, for every 12 months on the performance of the Company and within 180 days of the end of each calendar year, the annual financial statements.
Point 8. Point of cancelation upon subscription.
The subscriber must know the rights upon if he withdraw or cancel the subscription upon submission of "Subscription Form".
Point 9. Investment.
Will the amount of invested return back to you if your application is not selected?
Point 10. Closing date.
Will there be any closing date for submission and when is the share certs are out after execution of documents?
Point 11. Confidentially and Governing Law.
Are your personal investment information at safe hands and what is the governing law of your investment.