13/08/2025
Lesson 1 –
Understanding Companies: Public vs Private
Before we jump deep into stock trading, let’s first understand what we are actually buying when we buy shares.
A company is simply a business that is legally registered to operate — it could be making bread, building houses, selling clothes, or even running electricity supply like KPLC.
But companies come in two main types:
Private Companies
Owned by a small group of people — family, friends, or a few investors.
Shares are not sold on the stock exchange.
- Claymauth Company Ltd , many local businesses you know.
If you want a share in it, you must deal directly with the owners.
- Public Companies
Owned by many people (shareholders) — could be thousands or even millions.
Shares are sold openly to the public through the Nairobi Securities Exchange (NSE).
Anyone with a CDS account can buy these shares.
Examples: Safaricom, Equity Bank, KPLC, KenGen.
Why it matters in stock trading
When you buy shares in a public company, you become part-owner of that company.
If it makes profits, you can earn in two ways:
1. Dividends (profit sharing)
2. Capital gains (selling your shares at a higher price than you bought) 📈
In this series, we’ll focus mainly on public companies — because that’s where trading and investing happens for everyday Kenyans like you and me.
Tomorrow’s Lesson 2: “What Are Shares and How Do They Work?”