Acceptance of an Offer. A notification by a party to accept the terms of an offer made by another party.
For example, in a Rights Issue, the Investor will notify acceptance of an offer made by the Issuer. For Broker Sponsored Holdings, acceptances can be received electronically via CHESS. Issuer Sponsored acceptances must be forwarded to the Registry.
Synonymous with Holding, which is the commonly used term throughout CHESS documentation.
Account designations are generally registered for two reasons:
Holdings cannot be registered directly in the name of a minor, deceased estate, unincorporated fund or trust (eg. superannuation fund). In this case, the holding may be registered in the name of the parent or trustee with an account designation.
The selected time period for which financial reports are prepared, normally one year but listed companies also prepare and disseminate half-yearly interim financial reports.
A holder record maintained in CHESS by a broker to facilitate settlement of CHESS approved securities with clients who are not participants.
A Latin term meaning improvised and often impromptu.
A Latin term meaning "according to the value". It is often used in relation to Stamp Duty to describe the situation when duty is calculated according to the full market value of the securities.
An Assessed Value Payment (AVP) or cash payment could be an entitlement for those holding deliverable warrants which have not been exercised before or at expiry.
An individual appointed by a probate court to handle the estate of a person who died intestate. They have the same duties as an executor.
An Admitted Legal Practitioner is a Lawyer, Solicitor or Barrister.
Third party provider, for example, Link is an agent of the Issuer.
The process of totalling the unit quantity or settlement amount of individual settlement instructions, which are settling on the same holding or through the same payment facility, in the same settlement cycle.
A barometer of the sharemarket based on movements in the market value of a number of companies traded on the sharemarket.
The index is made up of the weighted share prices of approximately 500 of the largest Australian companies. Established by ASX at 500 points in January 1980, it is the predominant measure of the overall performance of the Australian sharemarket. The companies are weighted according to their size in terms of Market Capitalisation (total market value of a company's shares).
Issue (allotment) of new securities to an Investor and the recording of this issue on the register.
When comparing any two holdings there may be differences in either the name or address. Some differences will be so minor that the two holdings can be considered the same. These differences are the 'allowable differences'.
Depositary Receipts are negotiable certificates that represent a non-U.S. company's publicly traded equity or debt. Depositary Receipts are legal, US. Securities that trade freely on a major exchange or in the over the counter (OTC) market in U.S.
Dollars, pay dividends or interest in dollars, and settle, clear and transfer according to standard U.S. practices. The Depositary Receipt evidences the home market security which trades in a foreign country and it is custodised with a local bank, called the custodian.
An option or warrant contract allowing holders to exercise at any time up to and including the expiry date. American Style is the most common options listed on ASX. Compare with European Style Option.
Chairman’s report at the Annual General Meeting (AGM) of a listed company or any information provided by a listed company. An official announcement is typically regarding new share issues, expansion moves and others, which are likely to affect market movement. Listed companies are legally bound to report these announcements to the stock exchange allowing those Investors not attending the AGM to act promptly on the information. See also ASX Listing Rules.
The Annual General Meeting (AGM) is a meeting of a company's members (shareholders) which is required by Law. A public company must hold an AGM at least once in each calendar year and within five months after the end of its financial year.
The business of an AGM may include any of the following:
Shareholders vote on board elections and significant company issues.
A report provided to the ATO by Investment bodies each financial year. The report outlines details of Income paid to Investors during the financial year.
The report to Investors issued each year setting out the Issuer's activities and its financial statements.
The annual report contains profit and loss statements, balance sheet and a statement of cash flow, as well as notice of the Annual General Meeting (AGM) and business resolutions.
Annual yield is the dividend return from an investment. To calculate the annual yield divide the dividend per share by the share price, then convert to a percentage. Also known as dividend yield.
Yield = (Dividend per share / Last market price) x 100.
Annualised Return is the profit received to the writer of the option contract for buying the shares and writing that contract.
An APIR Code is an identifier for managed funds similar to an ASX Code for listed securities on the ASX.
A form or submission of information by an applicant to apply for securities.
A declaration and indemnity signed by an individual or an officer of a company to enable the reissue of a lost certificate.
The allocation of a portion of retained earnings (balance of profit and loss appropriation account) for a particular purpose, for example, to provide for a proposed dividend.
Arbitage relates to buying and selling of the same or equivalent securities in different but related markets.
Date upon which the relevant information is recorded.
Net assets of a company (in $) are decided by the number of issued shares. For example, ABC Ltd with $100,000 net assets and 10,000 shares issued has an Asset Backing of $10 per share.
A broad category of assets, eg shares, cash, property.
Resources owned by a company or person. Assets can be divided into a number of different categories based upon their liquidity that is, the ease with which they can be converted to cash. The categories are current assets, investments, fixed assets and intangible assets.
A company in which a long term investment is held and over which significant influence can be exercised. The investment is between 20% and 50% of the ordinary capital.
A unique code used by the ASX to identify listed companies.
The ASX Listing Rules govern the procedures and behaviour of all ASX listed companies and listed trusts.
Only public companies and public trusts are permitted to be listed on ASX. A public company (or trust) is one in which any member of the general public can acquire shares (or units) and there are no restrictions on the maximum number of shareholders (or unit holders).
In addition to prescribing pre-requisites for listing, the Listing Rules require that listed companies and trusts report announcements to ASX to keep the market informed of their activities and report profit results and other financial information within specific deadlines.
If an Issuer is unlisted, they do not have to abide by the Listing Rules.
The Securities Clearing House under the Corporations Law for transactions in CHESS approved securities.
The main functions carried out by ASTC are:
Abbreviation for Australian Tax Office.
AUD=Australian Dollar.
The 3-letter international currency code is normally the 2-letter country code (AU=Australia) followed by the first letter of the country's currency name (D=Dollar).
A formal verification of the accuracy of accounting records and published accounts. An audit can be external or internal and is undertaken both to ensure the correctness of classifications and amounts and to discover fraud. The external auditor has a statutory responsibility to report on the truth and fairness of the accounts.
A person appointed and authorised to audit or examine an account or accounts.
A statutory statement by the auditors of a company to its Investors in the annual report.
A unique number issued by the ATO in the case of a corporate Investor and can be used as a substitute for a TFN. It is a single eleven digit identifier for dealings with the ATO and for future dealings with other departments and agencies at all levels. It will eventually replace the Australian Company Number (ACN) or Australian Registered Body Number (ARBN).
If a company's yearly turnover is $50 000 or more, they must register for GST and will need an ABN. Non-profit organisations with a yearly turnover of $100 000 or more, must register for GST and, therefore, need an ABN.
The Australian Clearing House Pty Ltd, clears options and futures traded on ASX and is a subsidiary of the ASX.
A unique nine digit number identifying a company registered under Corporations Law. This should be replaced by the Australian Business Number.
Any person who wishes to carry on a financial services business (such as advising on financial products, dealing in financial products or operating a registered scheme) must hold an Australian financial services licence. ASIC regulates the provision of licences and the conduct of licensees.
The source of regular updates to the BSB codes currently in use in Australia.
APRA is the prudential regulator of banks, insurance companies and superannuation funds, credit unions, building societies and friendly societies.
A unique nine digit number identifying a body registered under Corporations Law. ARBNs are required for international companies that are registered for trading within Australia.
It is the Government body, which takes responsibility under the Corporations Law for regulating companies, trust units, the issue and sale of shares, company borrowings, and investment advisers and dealers.
It replaced the Australian Securities Commission on 1 July, 1998.
The ASX controls the market buying and selling of public company Securities. The national organisation is now de-mutualised and itself a listed company. The former stock exchanges in each state capital city became subsidiaries of the ASX.
An organisation that was formed to protect and advance the interests of all investors. ASA vigilance and persistence in matters such as related party transactions, the disclosure of remuneration and executive option scheme performance hurdles have contributed to significant improvements in the corporate governance of Australian companies.
The time by which banks must give final and irrevocable authorisation for Participants funds commitments for that day's settlement.
The maximum share capital which an Issuer is authorised by its constitution to issue to subscribers. Authorised capital is also referred to as Nominal Capital.
A pre-determined exact quantity of units which has been authorised to be able to alter the issued capital of a specified security as a result of a corporate action (allotment) or special off market transactions (placements).
The difference between the registered holding on the CHESS sub-register and the securities reserved in holding sub positions. A Holding Lock can lock the available balance.
Bad debts are losses which cannot be recovered. They are generally written off.
The completion of an accounting period – typically 30 June for the majority of Australian companies and superannuation funds.
A federal government tax on withdrawals from bank accounts by cheque.
A bank cheque is a cheque drawn by a bank on itself. Bank cheques are issued, as a service, to customers who do not have a cheque account or who require a bank-backed cheque to pay for goods or services.
Bank cheques are normally accepted as the equivalent of cash and goods or services are immediately given against them. Sometimes, especially for large transactions, the safety and convenience of bank cheques is preferred to cash.
A person who is declared bankrupt (either at his/her own request, or at the request of his/her creditors) is unable to pay his/her debts when they are due.
Their estate is placed in the hands of a receiver or trustee who will distribute the estate according to the provisions of the Bankruptcy Act. It should be noted that bankruptcy applies to an individual; the equivalent status for a corporation is receivership or liquidation.
Broker/Broker Settlement system. Operated by ASX, this system enables Brokers to settle inter-broker obligations nationally.
A market in which prices decline sharply against a background of widespread pessimism. The opposite of bull market.
See also Bull Market.
A comparison, between the performance of a fund, against the All Ordinaries index (for example).
Fund managers use it as a benchmark for Australian Shares.
Person/s or entity deemed to be the rightful owner of securities.
In most cases the person or company names as the Investor on the register of members is the beneficial holder. It is possible for a third party to hold securities on behalf of a beneficial holder.
A person who gains or benefits from a will.
A measure of market sensitivity, that is, the extent to which a share or a portfolio fluctuates with the market. It gauges the movement of a particular commodity’s price against a related composite index.
The whole market, by definition, has a beta factor of 1.0. If a stock has a beta of less than 1.0, its price is expected to rise or fall proportionately less than the market, while stocks with a beta greater than 1.0 are expected to rise or fall more than the market as a whole. The higher the beta, the higher the price volatility.
A bid is the “buying” price that an investor is prepared to pay for shares (opposite to offer). See also Offer.
A negotiable instrument that is often used as a method of raising funds privately. It is an unconditional order in writing requiring the party to whom it is addressed, and who accepts the bill (known as the acceptor), to pay a certain sum on a fixed date in the future. The acceptor assumes primary liability to pay on maturity the face value of the bill to its holder.
If the acceptor fails to pay the bill, the drawer who issues the bill is liable. If the bill has been endorsed by a third party, such as a bank, the endorser is liable should both the acceptor and the drawer fail to pay.
Bills of exchange usually mature within six months and are sold at a discount to face value.
Shares of a company known for its ability to make profits in good and bad times. The term has become a generic one for quality securities.
Those people who have been elected to direct the running of a company. Directors must be re-elected regularly to retain their position. They may be executive or non executive.
A loan for a fixed period of time at a fixed rate of interest which can be traded on the sharemarket. Generally issued by a government or semi-government body, as a tradeable debt Security to raise money. Holders receive a fixed rate of interest for their loan. Once the maturity date is reached the bond is repaid with interest.
A one-time extra dividend in addition to the usual payment. Generally, extra dividends are declared following exceptionally strong company earnings results, as a way for a company to distribute exceptional profits directly to shareholders.
Instead of being paid in cash, the bonus dividend may be applied to the payment, in full or in part, of amounts owing on a new share issue. The dividend may also be applied to the payment of any uncalled capital on shares which have already been issued.
Issue of shares to existing Investors without any monetary cost on a rights basis.
A Bonus Issue is the allocation of new shares to existing Investors, at no cost to the Investor. When Investors receive a Bonus Issue the actual value of their holding should not change, but the holding itself will increase in size.
Bonus Issues sometimes take place because the current market price of shares is considered to be too high, for example, over $20. By running a Bonus Issue, the number of shares in the company will increase, but the total value will remain the same, thus bringing down the price of the shares. A lower share price will make the shares more affordable to more people, therefore increasing liquidity.
For example, if an Investor held 1000 shares in Gadgets & Widgets Ltd and the shares were trading at $20, the holding would be worth $20,000. In a 1-for-5 Bonus Issue, the Investor would receive 1 new share for every 5 he owns. The share price will adjust to $16.66, calculated as $20 multiplied by 5, divided by 6. The amount of new shares issued will be 200 giving a total holding of 1200 shares @ $16.66 = $19,992 which is almost the value of the original holding, allowing for rounding.
Please note that the example given above is theoretical. The market will always determine the share price. Even in the case of a Bonus Issue, there may be other factors which will affect the price. For example, Resignation of CEO may see Investors may lose faith in the company and market could be flooded with shares which would make the price plummet if there are no prospective Investors (theory of supply and demand).
This is a plan which enables Investors to forgo their dividend in exchange for receiving an allotment of bonus shares. This is similar to a DRP but has different capital gains tax implications for Investors.
Also known as Share Election Plan.
A process by which institutions participating in a float trade shares with each other in order to determine a final unit price which can then be used as the basis to allocate shares to all applicants who applied for shares in a float.
A section of the principal register recording securities held in another state or country.
An agent who handles Investor’s orders to buy and sell securities, commodities, insurance policies or other property. For this service a commission is charged which depending upon the broker and the amount of the transaction may or may not be negotiated.
This may include a broking firm or investment house that is an accredited participant of the CHESS system.
The arrangement under CHESS where a client arranges with his broker to be sponsored by him. A formal agreement needs to be executed. The Investor is allocated a unique Holder Identification Number (HIN) which covers the Investor’s holdings in one or more listed companies. The HIN is effectively a password that needs to be quoted when orders are placed.
Clients using more than one broker would need to separately sponsored by each and would be given a separate HIN from each. If they wish to sell shares covered by one broker’s sponsorship through a different broker, then they must first arrange for a transfer of the shares to that latter broker’s sponsorship.
Electronic transfer of stock from one holder to another through a Stock Broker. In this instance the Stock Broker locates a buyer or seller through the Stock Market according to their clients instructions.
A Fee paid to stockbroking firms for buying or selling of shares. It is usually calculated as a percentage of the amount you invested.
A market where it is generally anticipated that the market will rise.
The opposite of bear market.
See also Bear Market.
The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. The five stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery.
Identifies the period of time that commences with CHESS start of day and ends with a corresponding CHESS end of day. User submitted transactions are processed by CHESS during this period. Processing for a specific business date may span one or more calendar dates.
Hours when businesses are in operation. The conventional business day is 8.30 A.M. to 5.00 P.M Monday to Friday. This excludes all ASX non business days and public holidays.
As set out by the ASX. The ASX Market Rules govern the operations and behaviour of Market Participants of ASX and Affiliates.
The Market Rules also set out the requirements to become a Market Participant (commonly referred to as 'stockbroking organisations'). The Rules also set out the requirements to become a Participating Organisation (commonly referred to as 'stockbroking organisations') and an Affiliate.
The ASTC Settlement Rules govern the operation of CHESS, the electronic transfer and settlement system, and the CHESS sub-register.
The purchase by an Issuer of its own shares. When shares are bought back by the Issuer they are cancelled and no longer exist, therefore reducing the overall number of shares on the company’s register.
This may be done in an attempt to increase share price (less shares, increased market value – theory of supply and demand). An Issuer has the right to purchase their shares back from the Investors in order to reduce the Capital for a greater share in the profits, or to remove shareholdings that are not of a marketable parcel.
The purchase can occur either on or off-market and through or outside CHESS.
A call option is the right to purchase a parcel of shares at a pre-determined price within a specific period of time. There will be an initial price paid for the shares. The Investor then owns part paid shares and the call option. At a later date (call date) the Investor will take up the call option and pay the remaining amount making the partially paid shares fully paid shares.
If a company is a no liability company, then the call is not enforceable, and the Investors are entitled to forfeit their shares as an alternative to meeting the call. If the company has limited liability, then the call is enforceable at law.
A letter sent to Investors requesting payment of calls.
A contract which entitles (but does not require) its holder to buy a fixed number of shares (usually 1000) in an underlying company at a predetermined price at any time prior to or on the specified expiry date.
At times a cap is applied to a warrant at the time of issue which caps the upside potential of that warrant. This is usually fixed by the issuer and details are provided in the disclosure document.
Any asset or stock of assets capable of generating income. This can include funding in assets, funding for operation of a business, or assets such as property or shares.
Capital Conversion is when shares are moved between different trading and/or working classes on the system. An example of this is shares which are issued with restrictions and cannot be traded for 12 months from allotment. When the 12 month period expires, they will need to be transferred into a class where trading is enabled.
This is common place with Employee Share Plans.
Funds spent for the acquisition of a long-term asset. In terms of accounting, an expense is considered to be a capital expenditure when the asset is a newly purchased capital asset or an investment that improves the useful life of an existing capital asset. If an expense is a capital expenditure, it needs to be capitalized; this requires the company to spread the cost of the expenditure over the useful life of the asset.
If, however, the expense is one that maintains the asset at its current condition, the cost is deducted fully in the year of the expense.
Capital Gains Tax (CGT) in Australia applies to the capital gain made on disposal of any asset, except for specific exemptions. The most significant exemption is the family home. Rollover provisions apply to some disposals, one of the most significant is transfers to beneficiaries on death, so that the CGT is not a quasi death duty.
CGT operates by having net gains treated as taxable income in the tax year an asset is sold or otherwise disposed of. If an asset is held for at least 1 year then any gain is first discounted by 50% for individual taxpayers, or by 33 1/3% for superannuation funds.
Net losses in a tax year may be carried forward, but not offset against income.
Personal use assets and collectables are treated as separate categories and losses on those are quarantined so they can only be applied against gains in the same category, not other gains. This works to stop taxpayers subsidising hobbies from their investment earnings.
The difference between the sale price of a capital asset and its cost.
Capital growth is where an asset increases in value. Capital gain occurs when the growth of capital is sold at a higher price than the original purchase price.
Capital Protected Warrants – namely Capital Plus and CaPELS are a promise to an investor that they will receive a set value returned on their investment. These can be singular or multiple securities quoted on the ASX or any exchange overseas.
Restructuring of an Issuer's issued capital structure. For example, when a $1.00 share is split into two $0.50 shares.
Capital reductions can involve the writing off of capital regarded as permanently lost. As the losses concerned have already taken place, such a paper exercise has no further effect on Investors although reductions involving the capital reserve account make the payments of dividends out of future profits easier.
This has now been abolished due to legislative changes in July 1998. Capital reductions involving a partial repayment of capital in cash or through a distribution in specie.
In the case of capital reductions and schemes of arrangement, under the Corporations Law, each require 75% majority approval at a general meeting and subsequent court approval.
Profits retained in the business and set aside for specified purposes. This is not available for distribution as a dividend for:
Cash covered is referred to as a derivatives position. For example, a written option contract where, cash is used by the option writer to meet their margin obligations.
Cash extraction is where investors extract cash froma portfolio while maintaining an equivalent level of exposure to the underlying securities. Investors can replace the shares in their portfolio with instalment warrants over the same shares.
The amount of money, which flows in and out of a business, the difference between the two being the important number. If more money flows into a business than out of it, it is cash positive. If more money flows out than in, it is cash negative. Cash flow is regarded by many as the ultimate test of financial health.
A new issue of securities for cash for the purpose of raising additional capital for the company. This can be a bulk offer of existing securities to new Investors, or an offer made to existing Investors in proportion (e.g. 1 new security for every 2 securities held) to their existing shareholding. It is usually issued at a discount to the market price.
A cash settled warrant is where the warrant issuer settles via cash payment to the warrant holder. The cash payment is determined by the terms and conditions of the warrant. In some instances investors can choose cash settlement or physical delivery.
An expression used in futures and index options trading which applies when physical delivery is impractical and contracts are settled by attaching a monetary value.
The Participant, within a Participant group, that is designated as the source of the common settlement holding for the group.
A Share or Shares for which a physical certificate has been issued.
A section of an entity’s register which administers a class of securities. Certificated holdings of securities are recorded in that class.
These can be shares, options or other securities.
This occurs when Investor details are converted from the certificate sub-register holding to the CHESS sub-register holding.
This occurs when an Investor or Issuer decides to convert from a Certificated holding to an Issuer Sponsored holding.
A certified copy is a photocopy of an original document signed by a Justice of the Peace or someone that is authorised to witness a Statutory Declaration.
It is signed to say that they have seen and can verify that the copy is a true and correct copy of the original document.
The person elected to head a board of directors.
Abbreviation for Clearing House Electronic Sub-register System. The system provides the central register for electronic transfer of share ownership. It is established and operated by the Securities Clearing House (SCH) for:
Individual Investors cannot deal directly with CHESS. They usually have to be sponsored by a participant (usually a broker) to the system. Large institutions, custodian nominees, trustee companies and the like can also be direct participants.
Two distinct versions of CHESS are in concurrent use:
CHESS Approved Securities are securities that are approved by Securities Clearing House (SCH) Business Rules. Essentially, this is all listed securities that are traded on the ASX except some listed foreign securities.
CHESS Depository Interests is the general term for electronic depository receipts issued over different security types. This is a mechanism that allows foreign listed companies to trade their stock on the ASX by using a depository nominee as the legal entity and a sub register representing the Investors that hold an interest. There are two products:
CHESS pariticpants are generally stockbrokers and larger institutional investors who directly interface with CHESS. This enables them to process transactions relating to CHESS holdings.
CHESS holdings are treated separately from issuer sponsored holdings. A securityholder would enter into an agreement with a CHESS participant ie Stockbroker to effect transactions on CHESS holdings. The CHESS participant will then maintain and transact on behalf of the CHESS holder.
These statements are provided by the ASX and are issued at the end of the month showing any movement in shares for CHESS holders.
The registry does not provide statements to CHESS holders.
The recording of uncertified holdings of securities within a class on the section of an entity’s register for CHESS approved securities. The securities can be shares, option or other securities including CDIs.
A CHESS Transaction Identifier is a unique reference which is allocated by the registry on submission of a message to CHESS and by CHESS prior to submitting a message to the registry. It has the form:
An entity that is owned by a parent or holding company.
Types of listed securities that are differentiated by the level of voting rights shareholders receive. For example, a listed company might have two share classes, or classes of stock, designated as partly paid and fully paid.
Class of options are contracts in the same underlying security of the same type, which can be wither call or put options.
An asset of a kind referred to in paragraph (a) of the definition of restricted securities in ASX Listing Rules.
The process of determining obligations pursuant to ASX market transactions for the exchange of money and securities between counterparties who are Participants in the Clearing House; clearance creates settlement obligations for securities and funds.
A clearing account can either be an accumulation account or a settlement account.
A Client is;
A fund which has a fixed number of issued shares traded on a stock exchange. Because the supply of shares is limited, they will rise and fall in value according to supply and demand just like ordinary company shares.
The selling of an option which has been bought in the same series.
The purchase of an option, by a writer, which has the same terms as an option which has previously been sold. This transaction terminates his/her obligations as a writer.
The official seal of a corporation, used to authenticate documents issued in the name of the corporation. Since the Company Law Review Act, 1998 came into effect on 1 July 1998, common seals became optional.
A legal entity regulated by the Australian Securities Commission under the Corporations Law. Also referred to as a corporation.
Companies can take a number of forms, including Private Limited, Public Limited and No Liability (N.L.).
Private Limited Companies are companies that restrict the right to transfer shares freely which limit the number of share holders and which prohibit both the offer of shares to the public and the soliciting of the loan funds from the public.
Public Limited Companies are companies where members of the general public can acquire shares.
They are usually owned either directly or beneficially by a large number of share holders. They can issue shares and debentures by way of a public issue and there are usually no limitations on the transfer of shares.
In the case of both Public and Private Companies, where there is limited liability, the share holders liability is limited to the value of their shares in the company, even when the debts of the company actually exceed the value of the company. If the Investors have partly paid shares in the company and the company is liquidated the Investor is still required to pay the call.
No Liability Companies are companies where Investors have the privilege of not paying calls. The Investors are entitled to forfeit their shares as an alternative to meeting the call. Most No Liability companies are mining and exploration concerns.
A designated office of the ASX. Announcements are submitted to this office by a company or its advisers, where they are processed and released to the market.
The fax numbers are:
For announcements sent from elsewhere: 61 2 9347 0005 or 61 2 9778 0999.
The complete name, as reported to the ASX of a listed company.
Company options are options issued by a company over unissued shares.
They will have an exercise price, and an expiry date. For example, XYZ $1.00 expiring on June 30 2008, and are listed on the ASX until that date. Provided the share price at the time of expiry is above the exercise price, the option holders will exercise their option by paying the exercise price and be issued with a new share in the company, which will then rank equally with other ordinary shares.
Companies report within their annual report the basic and diluted earnings per share (EPS) results.
Under the Corporations Law companies are required to employ a Company Secretary who is responsible for the record keeping.
The process of ensuring that a company and its employees adhere to relevant laws, statutory regulations, codes and standards, legislative and contractual obligations.
A document to describe how a scheme of a responsible entity operates and that it operates within the law and the scheme’s constitution. The document is lodged with ASIC.
During a takeover bid, Investors will be invited to part with a specific proportion of their holdings. Acquisition of over 90% of the shares from more than 75% of the Investors is required before a compulsory acquisition can occur.
If these conditions are met, the offerer SPELLING can then compulsorily acquire the balance to mop up the shares belonging to non-acceptors (dissenters), including deceased estates and Investors who have disappeared.
Unless a Investor has requested in writing that a Company send the full Annual Report, Section 314 of the Corporations Law allows a company to send a Concise Financial Report in substitution for its Annual Report.
A concise report for a financial year consists of:
Under AASB 1039 a concise financial report must include the following financial statements:
Each financial statement must be presented as in the financial report, in accordance with other Accounting Standards, except for the omission of cross-references to notes to the financial statements in the full financial report. The financial statements must be accompanied by discussion and analysis to assist the understanding of members.
It is the conditional level enforced by an Issuer for a corporate action to proceed. For example, in the case of buyback, the Issuer may impose that a certain % of holders must accept the buyback process or a certain % of shares must be accepted for buyback before the offer for buyback is withdrawn.
Securities subject to CHESS foreign ownership restrictions that are available for delivery via a foreign to foreign allocation.
Price paid to purchase shares.
A combination of the financial statements of a parent company and its subsidiaries, presenting the financial position of the group as a whole. The statements report the combined operating results, financial position, and cash flows of two or more legally separate but affiliated companies as if they were one economic entity.
Consolidation is a form of reconstruction. It is the combining of a company’s shares (from a larger number of shares) into a smaller number of shares, each with a correspondingly higher market value. The total value of any Investor’s holdings is not affected by the consolidation. Sometimes consolidations are made to avoid a "penny dreadful" image. For example, converting ten 20 cent shares into one $2 share.
The opposite of a share split.
Rules governing a company. Under legislative changes which commenced on July 1, 1998. The constitution replaced the Articles of Association and the Memorandum of Association.
An economic event, gain or loss, that is in the process of occurring or not occurring.
The possibility of an obligation to pay certain sums dependent on future events.
A written document, containing details of a stock exchange deal, which is sent by a broker to a client. The contract note details the number of shares, all associated costs, and the type of security.
The minimum amount of a commodity or financial instrument which can be traded in a futures or option market. This is standardised to 1,000 underlying shares.
Shares on which only part of their par value (formerly the share premium) has been paid. For example shares may be issued with a par value of $1.00, of which only 50 cents has been paid, with a further 50 cents still owing. At the call date, the Investors of no liability companies can forfeit their shares instead of paying the call. Also known as Partly Paid Shares.
Contributing shares are similar to partly paid shares, with the exception that a date for the payment of the call date has not been set by the Issuer.
An entity that can direct the movement of uncertificated securities for holdings under its control.
For holdings on the CHESS subregister, the controlling Participant is either a Broker or a NBP. For holdings on the Issuer's subregister, the controlling party is the Issuer.
The movement of a futures price towards that of the underlying instrument as the contract date approaches.
The cancellation of certificates and recording of the shares in an uncertificated holding, or the change of class of Security (options, notes, etc) to another (fully paid).
The number of ordinary shares obtainable on the conversion of one convertible preference share or convertible note. For example, a ratio of 1:5 means that every one share will be converted to five shares. This could include conversion of one employee share to five fully paid shares once escrow or loan periods have lapsed).
Debentures are fixed interest securities issued by limited companies in return for long term loans. Convertible debentures carry an option at a fixed future date to convert the stock into ordinary shares at a fixed price. This option is compensated for by a lower rate of interest than an ordinary debenture.
Convertible debentures are attractive since they offer the Investor the prospect of purchasing equity shares cheaply in the future, without sacrificing his/her Security.
For this reason, convertible debentures are issued at times when it is difficult to raise capital either by equity or fixed interest Security.
Security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder.
Convertible notes are financial securities issued to an Investor by a company in return for cash.
It is traded on the share market and normally accrues a fixed interest rate during its life. The notes give the holders the right at specified times to convert the loan to shares on a specific date or redeem them for cash. It differs from a debenture in that it offers the Investor the option of converting the loan at a later date into equity (shares) in the issuing (borrowing) company.
These shares have a specific date at which they are redeemable (i.e. exchanged for cash by the issuing company).
They are broadly similar to convertible notes, in that they may be converted to ordinary shares, though the holders of redeemable preference shares rank after note holders (but ahead of ordinary Investors) should the issuing company be liquidated or placed into receivership.
Security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder.
A series of specialised processes that usually involve some kind of action being taken on each Investors holding at a specified date. They may be carried out by the registry on behalf of the Issuer. Examples of Corporate Actions include Rights Issues, Bonus Issues, Dividends or other payments, or offers under a Buy Back scheme.
A term for company. The term is also sometimes used to refer to public sector (government) enterprises which engage in business activities.
An Act of the Commonwealth Parliament dealing with nearly all aspects of companies and securities regulation including fund raising, and the protection of Investors and creditors. It replaced previous company legislation with effect from 1 January 1991. It drew together the following four Commonwealth Acts, as well as various State and Territory Acts:
Costs incurred as a result of an investment position. These costs can include financial costs, such as the interest costs on bonds, interest expenses on margin accounts and interest on loans used to purchase a security, and economic costs, such as the opportunity costs associated with taking the initial position.
An agent (share registrar) able to issue internationally traded share certificates on behalf of the Principal Registrar.
The annual rate of interest paid by the issuer of a bond until maturity.
A Court Ordered/Scheme (COS) Meeting occurs when the Court, either of its own motion or on the application of any director or of any member who would be entitled to vote at the meeting, orders a meeting to be convened in such a manner as the court thinks fit. This type of meeting would be held where there are issues which need to be voted on by Investors.
The Business of a COS Meeting would vary depending on the reason for the meeting being called. One example would occur when a court makes an order enabling a company to put a De-Merger proposal to Investors.
The Proxies that are collected, along with all resolutions are usually lodged with the court the day following the meeting.
Covered warrants are placed in a trust or other custodial arrangement. They are not issued by the issuer itself. A covered warrant is a security which gives the holder the right to acquire a share or bond at a specific price and date.
Someone to whom money is owed. A company’s creditors are other companies, individuals, and perhaps the government to which it owes money in return for goods supplied, services rendered and taxes for which it is liable.
The paperless share settlement system through which trades executed on the London Stock Exchange’s markets can be settled. CREST is operated by CRESTCo, and was introduced in 1996. It is the United Kingdom’s equivalent of CHESS.
Meaning "with".
When a company announces a rights issue, existing shareholders get the right to buy new shares, usually at a discount to the current share price. When a share is cum rights, it means that it is offered for sale with any associated rights. When it is ex rights it is offered for sale without the rights. The share price of the shares will be higher cum rights than it will be ex rights.
The part of an Investor’s holding that is cum i.e. the part, which will participate in a defined corporate action. The cum balance plus the ex balance must always equal the Investors record date (books close) balance.
The period between the declaration of a dividend and the last day to register. The new shareholder will be entitled to the dividend. Sold after this date the shares become 'ex div' and the dividend will accrue to the previous shareholder who has sold his shares.
Dividends on cumulative preference shares that accrue as a commitment of the company if they are not paid in any year. Arrears of cumulative preference dividends must be paid before any dividends are paid to ordinary Investors.
Unless specifically stated to be non-cumulative, dividends on all preference shares are deemed to be cumulative.
A type of preference share. The term means that if any year’s preference dividends are not paid out (for example, due to lack of profitability), then all arrears must be paid off before payment of ordinary dividends is permitted.
Dividends on non-cumulative preference shares, however, are looked at only one financial year at a time and Investors have no protection against missed declarations.
Notes and coins that are the current medium of exchange in a country.
Detachable options in securities issues giving the holder the right to purchase additional securities denominated in a currency different from that of the original issue. The coupon and the price of the securities covered by the warrant are fixed at the time of the sale of the original issue.
Assets of a company which are regularly turned over including cash, work in progress and debtors. These are generally converted into cash with twelve months after the end of the financial year for the company.
A confirmation of an Investor's holding details by security type as at current date. Issued when a request is received for current holding information from an investor or their representative.
Debts owed by a company which are due for settlement within 12 months. These include creditors and taxes due etc.
An entity or nominee holding that usually safeguards and maintains assets (such as shares) on behalf of Investors until a certain event occurs at which point the Investors gains full access to the assets.
Examples include the CHESS depository nominee who holds shares on behalf of Issuer sponsored Investors of CHESS Depository Interests (CDI’s) and Employee Share Plans where the shares are allocated to the custodian and not available to the employee until the shares are fully paid for.