ASX service for disseminating stockmarket data to the public in the form of electronic signals. In summary, ASX disseminates intra-day market data, market snapshots, Issuer/Security information, company announcements and trade/quote data.
The date on which the Issuer makes its dividend or interest payment to Investors.
Fixed interest securities issued by limited companies in return for medium to long term loans. Also used to refer to any title on a secured interest bearing loan. Debentures are dated for redemption (i.e. repayment of their nominal value by the borrower to the holder) between ten to forty years ahead but occasionally may be irredeemable.
Debentures are usually secured by a trust deed which spells out the terms and conditions of the fundraising and the rights of the debenture holders. The funds of the debenture holders are usually secured by a charge over the assets of the borrowing company.
Debenture interest must always be paid regardless of whether the company makes a profit. In the event of non payment, debenture holders can force liquidation and rank ahead of all Investors in their claims on the company’s assets.
Debentures shares are most appropriate for financing companies whose profits are stable and have substantial fixed assets such as property companies.
An obligation by one individual or company to pay a specific amount of money to another party.
Money raised by selling bonds, the principal and interest on which must be repaid.
The increase of liabilities to fund operations through the issuing of debentures or bonds.
A security such as a bond or note with specified interest, representing a loan which is repayable at some future date.
A measure of a Company's gearing (borrowing) which is calculated by dividing all financial debt by Investors' funds (equity).
The assets or holdings left behind by a person (Investor) at the time of death.
Court order in a divorce case, which will become absolute unless valid reasons are produced to oppose it within a fixed period.
A person (Investor) who failed to do what was legally required, usually referring to failure to pay a debt that has fallen due. This can involve owing an amount to an entity normally in the case of owning partially paid securities and not being able to make payment on a call notice, made by a Registry. This does not apply to shares held in No Liability Companies.
New shares which are already listed but for which records of title are still being processed. The shares can be traded on the basis of settlement on some specified date later than normal.
A situation in which the settlement of an obligation on trade date plus T+3 (3 business days) is deferred until the time following the despatch date that the ASX fixes.
Deferred shares are inferior to a company’s ordinary shares in a defined way. For example, they may be shares which do not currently participate in dividends for a defined period of time, may be a non voting share, or may receive less favourable treatment in the event of a liquidation.
Same as Deferred Delivery, but applicable to trades occurring on the New Zealand Stock Exchange.
The removal of a company’s shares from listing on the stock exchange. This may occur because the company has failed to comply with the exchange’s rules, or no longer meets listing requirements, for example it has been taken over.
The settlement by transfer of the underlying asset upon exercise and after the payments are made.
It is a unique deliver point for mail delivery anywhere in Australia. It is determined by Australia Post and identifies a geographical address as a valid address location.
The irrevocable exchange of unconditional securities for unconditional same day funds to settle an obligation.
The delivery of securities in exchange for an asset, usually money. One of two methods for the delivery of securities, the other being delivery vs. receipt.
See Delivery vs. Receipt
The delivery of securities in exchange for a signed receipt for the securities. One of two methods for the delivery of securities, the other being delivery vs. payment.
See Delivery vs. Payment
The measure of the rate of change of an option or warrant's price compared to the change of price of the underlying instrument.
A transaction submitted by a Participant to cause a movement on a CHESS holding which they control.
The transaction is processed within time constraints published in the Clearing House business rules. The transaction is not included with other transactions and does not involve a transfer of funds through CHESS.
Demand transactions are not part of the daily settlement run.
The disintegration of a company into separate operations in the expectation that this will enhance performance.
Demutualisation involves changing from a mutual company to a shareholder owned company.
Members are issued shares in exchange for their membership rights. Demutualisation separates the rights as a member from the investments or other rights as a policyholder.
Depository Interests are the debt/bearer component of Foreign Depository Interests and apply to both foreign and domestic securities.
De-Registration of a Company is the removal of an Issuer from the official ASX listing or the official winding up of a company.
Prior to delisting, ASX will have suspended quotation of the Issuer's securities. Settlement of outstanding transactions and registration of transfers continues through CHESS after the securities have been suspended from quotation.
In due course, the Registry instructs CHESS to close the subregister. In some cases, the Issuer may continue as an unlisted company where the register is maintained in Issuer Sponsored or Certificated form. However, no CHESS subregister is maintained for unlisted securities.
A financial instrument or product that derives its value from the price of another security, liability or index. For example, options, swaps, forwards, futures contracts or warrants. A derivative is known as synthetic.
A standardized descriptor used to provide further identification for an Investor's account. For example, trusts and funds must be registered in the name of the trustees, not the name of the trust. The trustees of a superannuation fund are registered as joint holders with the super fund as a designated account.
(a) Share Registry: The allotment date. The date by which the Issuer expects all outputs from a corporate action to be in the mail or handed to the bank for payment as required. This is often 1 or 2 days prior to the Date Payable.
(b) CHESS definition: The Dispatch date is also known as date payable or payment date. It is similar to Register’s date payable which is payment date of dividends and interest. It is the date announced by an Issuer for the despatch of at least 90% of allotted securities pursuant to a corporate action.
Also known as Dispatch Date.
Earnings per share adjusted for the existence of options and convertible securities. Diluted earnings should always be used if these are lower than undiluted earnings.
Instruction given by the Investor stating the account that their interest and dividends are to be paid into.
A service whereby a Investor's dividend, interest or trust distribution payment is credited directly into the Investor's bank, building society or credit union account.
Direct Holding means a CHESS Holding where the Holder is:
(a) the Controlling Participant; or
(b) a wholly owned subsidiary of that Participant.
Persons elected by Investors to collectively be responsible for the management, operation and implementation of corporate objectives. The directors have legal, moral and professional obligations to run the enterprise for the benefit of all Investors. Directors report to the Chairperson.
A public company must have at least three directors; a proprietary limited company must have at least two.
An executive director is a director who is also employed by the company.
A non-executive director is not employed by the business.
A booklet outlining the risk factors associated with an investment and providing full information for an investor.
(a) In the case of Link, discount is the percentage discount, to the current market price, at which Dividend Reinvestment Plan (DRP) shares are allotted, if applicable.
(b) The excess of the nominal, face or par value of a Security over its price. It is the amount by which a Security sells below its net tangible asset backing. Securities are traded at a discount on the assumption that the buyer will receive face value when the securities mature. It is the opposite of premium.
Due to insufficient funds in the drawer's account, a bank will fail to process (honour) the cheque.
During a takeover, Investors in the target company are asked to accept or reject the offeror’s bid. Investors who reject the takeover offer are known as dissenters or dissenting Investors.
The payment of a dividend by a company out of its profits. These are allocated on a per unit basis.
For an Investor: The process used to describe how an Investor can have a specified number of units removed from their holding and placed under custodial control. This is typically due to some breach of rules such as owning an insufficient level of shares by value or purchasing shares that take the foreign ownership limit for a register or individual holding over its maximum.
For a company: The liquidation or sale of parts of a firm. The disposal of an asset by sale. The selling off of an investment. In effect, divestment is the opposite of an acquisition or merger.
Payment by companies to the Investor representing the after tax earnings. Payments are based on an amount (usually cents) per share. Dividends may be franked, unfranked, or partially franked.
Value of last quarterly cash dividend or the number of shares an investor receives for each share owned in a stock dividend.
A tax rule effective in 1 July 1987 which was designed to remove the ‘double’ taxation of company dividends. Previously, dividends paid out of after tax profits were taxable in the hands of the Investors; that is, the company paid tax on its profits in the first instance, and paid dividends to the Investors who in turn paid tax on the dividends.
Under the new system dividends will be taxed only once, either by the company or, if the company does not pay tax, by Investors who receive the dividends.
With imputation, dividends distributed by a company that has paid full company tax are not taxable in the Investor’s hands. Dividends paid out of profits where the company has paid company tax are known as fully franked dividends and carry with them imputation credit.
Where the company has not paid company tax, Investors will receive unfranked dividends and will be required to pay tax at the relevant individual marginal tax rate.
Dividends can also be partially franked where the company has paid a proportion of the company tax rate. Investors will receive imputation credits for the franked proportion of their dividend. They will be required to pay tax on the remaining unfranked proportion of their dividend.
The annual dividend income per share received from a company divided by its current share price. Put simply - how much income are you getting out of the company for the capital you've got locked up in it?
An investment plan offered by some corporations enabling shareholders to automatically reinvest cash dividends and capital gains distributions, thereby accumulating more stock without paying brokerage commissions.
The amount of dividend payable per share.
A scheme offered by many Issuers to their Investors which enables Investors to receive shares rather than cash for dividends declared by an Issuer. These shares are usually issued at a discount to the current market price and no brokerage or stamp duty is paid.
A timeline of 5 business days between Ex-Dividend and Record Date where trading in securities will determine who will be entitled to the Dividend.
Dividends can be classified as either Interim or Final. A final dividend occurs at the end of a company’s financial year and any in-between are generally classified as interim. There are cases when special dividends occur, these are irregular payments. For further information on dividends refer to the company announcements.
An amount owing to an entity at the end of an accounting period that is unlikely to be received. They would be recorded as an adjustment in the profit and loss account at the end of the period.
Income from a company over a specific period. This could be expressed as either gross or net.
Colloquially net is referred to as the "bottom line" because earnings are the entry at the bottom of the income statement after all expenses and costs are deducted.
An indicator of a company's financial performance calculated as revenue minus expenses excluding tax and interest. Also referred to as operating earnings.
Earnings per share are the measure of the earnings that are attributable to each equivalent ordinary share over a twelve-month period. It is obtained by dividing a company’s net profit (less the preference dividends) by the total number of shares on issue.
Adjustments are also required if the company has made any share issues or repaid any capital during the year, and also if convertible securities or options exist.
One of the first things you will receive from a company in which you own shares is evidence of that ownership in the form of a holding statement. Share holdings are registered electronically on the ASX and investors no longer receive a share certificate.
Investors now receive a shareholding statement, initially when the holding is established, and then whenever the holding changes. The statement details all transactions and will show the number of shares you own at the beginning and end of the period.
A label for remuneration schemes developed by Issuers.
Employee Share Plan relates to schemes established by Issuers that allow employees to take-up a shareholding in the Issuer as part of remuneration packages. Such shares are usually at discounted rates and may be offered to the employees in different forms such as being based on a loan or based on contributions made by the employer and employee.
Employee Voting is part of an AGM/EGM. Most employee shares are held in Trust for the employee. If shares are held in Trust, staff are allowed to vote only by directing the Trustee how to vote. This is done by completing a Voting Direction Form (VDF) and sending it either to Link or to the client for processing. If the VDF is sent to Link for processing, once completed, the Trustee is then advised of the votes and fills out one proxy form for all holdings.
The cut-off time for CHESS to accept transactions for end of day processing.
Although the buyer makes an upfront payment called a “premium,” an endowment warrant is a long-term margined stock purchase instrument with almost none of the contingency features usually associated with warrants.
The premium payment is based on a calculation of the estimated dividends the underlying stock will pay over ten years. The premium payment per share is equal to the current stock price less the value of a ten-year amortizing margin loan that the forecast dividends would liquidate. If the actual dividend is equal to or above the forecast, the loan is repaid in ten years or less, and the investor owns the stock outright as soon as the loan is repaid.
If the dividend payments are below expectations, the investor can pay off the remaining loan and receive the shares. Alternately, the investor can sell the net position at the end of ten years. Endowment options were introduced in Australia, primarily as a way to introduce limited leverage into retirement accounts.
Investors are offered an entitlement to purchase additional securities in a new issue on a specific date (record date).
As stated in Australian Accounting Standard AASB 1029 an entity is any legal, administrative or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives.
(a) A broker's nominee company used to hold shares where immediate delivery of a transfer to another broker cannot be made.
(b) Uncertificated security holdings maintained for the sole purpose of facilitating settlement of securities transactions. Also known as a Clearing Nominee Holding.
An investment that involves a variable performance based rate of return. In sharemarket terms, equity is often used as a synonym for shares and represents part-ownership of a company. It is distinct from fixed interest securities such as bonds and debentures.
From a business perspective, equities represent the total interests of parties in the assets of that business entity. Lenders and creditors have a 'specific entity', and owners have 'residual' equity.
Capital raised by a company through issuing shares. An alternative to debt funding.
An investment that combines a life insurance policy with a mutual fund. The fund shares are used as collateral for a loan to pay the insurance premiums. Equity funding gives the investor the insurance protection benefits along with potential investment appreciation.
An equity such as the following:
An equity warrant is an option to buy the common stock of the debt issuer at a predetermined price on or before a predetermined expiry date.
The equivalent fully paid ordinary shares on issue takes into account the number of actual fully paid shares at period end as well as the number of potential fully paid shares.
Contributing, new, and deferred shares are treated as fully paid; options and convertible notes are treated as increasing the number of fully paid shares by the number of shares which will be created upon exercise of the options or conversion of the convertible notes.
The average number of equivalent fully paid ordinary shares. The weighted method gives shares that were in existence for the entire period a weight of 1 and other shares a weight of less than 1, as a proportion to the period they were in existence. The weighted average capital also reflects any dilution that occurred during the period.
Refers to units (shares) allocated to Investors that are subject to restrictions such as not being able to be traded for a specified period of time.
All assets owned by an individual at death, to be distributed according to the individual's will (or a court ruling if there is no will).
Process of noting a "stop trade" indicator against an Investor’s holding where the related certificate has been declared lost or stolen.
Options or warrants that are only exercisable on their expiry date.
See also American ExerciseEx (Without something). For example, shares bought ex rights or ex dividend do not entitle a purchaser of shares to those benefits, which remain with the seller.
Latin for "without". Without something, for example, shares bought ex dividend do not entitle a purchaser of shares to those benefits. Those benefits remain with the seller.
Shares sold ex bonus entitle the seller to retain the bonus shares being issued. The ex bonus date occurs seven business days prior to and including the Record Date.
The Record Date is the date on which the company closes its books to determine which Investors are registered to receive the bonus shares.
The share price may fasll on the ex bonus date to reflect the dilution effect as the company's assets are spread over a greater number of shares on issue.
The date on which shares change trading from "cum" to "ex" status. The date on which shares change from being quoted "cum" to "ex". It is usually the fourth business day prior to the record date. It is the first day that the share trades without the buyer qualifying for the dividend.
Ex means "without". Purchasing shares ex-dividend means that the seller is entitled to the current entitlement (for example, dividend, bonus, rights) that is currently attached to the shares being traded and not the buyer. For example, an Investor buying shares ex-dividend will not receive the dividend on those shares. It is the opposite to cum.
The "cut-off" date for receiving the next dividend. From this date, new shareholders will not participate in the next dividend. The price of a share will typically fall by the value of the dividend on this date, as it will no longer carry an entitlement to receive this latest dividend.
A share, which is trading such, that buyers do not receive the right to a new issue, usually resulting in a lower price.
Open ended listed investment fund, that combines some of the characteristics of shares and managed funds.
Options, which are bought and sold on the options market, operated by ASX. It allows both the taker (buyer) and the grantor (seller) of an option to trade out of the option before the expiry date.
A director who is also employed full time by the company.
A person charged with winding up a deceased estate in accordance with a valid will. The executor is the person who administers the estate, but can also be the beneficiary to the will.
When an option or warrant holder takes up his or her option to buy or sell the underlying instrument (for example shares, commodities, an index etc) he/she is said to exercise the option or warrant.
The date at which the taker of an option has to settle the amount for buying the underlying security.
The price at which an option or warrant holder can buy or sell the underlying instrument (for example, shares, an index, commodities etc). Also known as the strike price.
The last date an option can be traded or exercised.
A meeting for Investors when a special issue needs approval quickly. For example, Investor approval may be required if a Property Trust wants to purchase a new property, or if a company would like to offer a special dividend. The Proxy form and Notice of Meeting must be sent out at least 21 days prior to the meeting.
Costs which affect a company's profit (or loss) which are not associated with normal activities and which are not expected to recur.
The theoretical price at which a futures contract should trade to be equivalent to the purchase price of the underlying instrument. In options trading the term is also used when referring to intrinsic value.
NZ equivalent of CHESS. See also CHESSFiduciary A person or organisation entrusted with the responsibility of managing, holding or investing assets in the best interests of the owner of the assets. For example, trustees of superannuation funds are fiduciaries in respect of the members of their funds.
Dividend paid after the conclusion of the company’s financial year when the profit for the year is known.
Dividend paid after the conclusion of the company’s financial year when the profit for the year is known.
An institution which accepts funds from the public and reinvests in bank deposits, bonds and stocks etc. These include banks and insurance companies.
Normally, the financial year ended, as released in the company's annual report but can also apply to shorter and half-yearly financial periods.
The Link FSG is an important document that is intended to assist you as a retail client in deciding whether to use any of the financial services we are authorised to provide and to to ensure that we comply with our obligations as an Australian financial services licensee.
The matters covered in our FSG include: who we are and how we can be contacted; the financial services we are authorised to provide; the remuneration we (and other relevant parties) receive in relation to the financial services we offer and how we deal with any complaints you may have.
The earliest Settlement Date for transactions in securities issued as a result of certain Corporate Actions.
FASD = Despatch Date + Settlement Offset + FixedSettlement Period
The First payment is the initial payment (capital plus interest and fees) to purchase the shares via an Instalment Warrant.
Usually a reference to a fixed interest security - a debt security which offers a fixed rate of interest throughout the life of the investment. The price of a fixed interest security will fluctuate as market rates change, and also as the time left to maturity shortens.
A settlement which takes place on a fixed date related to the transaction date under the rules of the market. Presently, the fixed period settlement date is T+3.
The stock exchange system introduced in September 1989 which was designed to speed up the transfer of legal title to stock exchange securities to buyers. It enabled shareholdings to be held and traded in uncertified form. CHESS has superseded this.
A body corporate incorporated in an external Territory, or outside Australia and that Territory, which is not a corporation sole or an exempt public authority. The Corporations Law also extends the term to certain unincorporated bodies.
The ASX World Link service uses Foreign Depository Interests (FDIs) to electronically record holdings of international securities in CHESS. Each FDI holding records an Australian investor's equitable interest in an international security. The international securities recorded as FDIs are held in the overseas market in safekeeping by CHESS Depositary Nominees (CDN).
FDI holdings are recorded or removed from CHESS to reflect purchases and sales of international securities on overseas markets through the ASX World Link service. FDIs are not traded on ASX.
CDN is responsible for maintenance of the register of FDI holders in CHESS and for the distribution of economic benefits (including dividends) to holders.
This is the percentage of shares on issue that any one foreign Investor may hold.
These are restrictions specific to each Issuer. They outline restrictions regarding such things as the percentage of shares on issue that any one foreign Investor may hold or that all foreign Investors on the register may hold in total and define rules pertaining to treatment of breaches of these restrictions.
This is the percentage of shares on issue that all foreign Investors on the register may hold in total.
Transfer of securities subject to CHESS Foreign Ownership Restrictions where a foreign buyer replaces a foreign seller on the Issuer’s register.
The forfeiture of shares may occur when an Investor is unwilling or unable to pay a call made by the Issuer. Investors with shares in a no liability company have the right to forfeit their shares by not paying a call. Forfeited shares may be auctioned or cancelled.
The 45-day rule is a Tax rule, where an Investor must hold their shares for at least 45 days to enable them to claim the imputation credit from a fully franked or partially franked dividend. If the shares are sold before this time the imputed credits may be lost and the dividend may be viewed as an unfranked dividend where the Investor is liable for the full amount of tax.
The rule was developed to stop Investors buying shares before and selling after the ex-date, in order to receive the benefits of imputation credits.
An arrangement in Australia that eliminates the double taxation of dividends. Dividends are dispersed with tax imputations attached to them. The shareholder is able to reduce the tax paid on the dividend by an amount equal to the tax imputation credits. Basically, taxation of dividends has been partially paid by the company issuing the dividend.
An amount associated with a dividend and representing income tax paid by a company; this is treated as assessable income to the individual Investors concerned, but it can be used as a tax rebate for Investors that receive the dividend.
The Franking Rate refers to the amount of tax the company has already paid.
Fully-covered warrants, as defined in the Australian Stock Exchange (ASX) Business Rules, may be a security, as it is subject to a ‘cover arrangement’. ASX Business Rule 8.1 defines a cover arrangement as involving some form of trust over relevant issued securities.
Dividends paid on shares where the company has paid all the company tax paid on the income, which went to the dividend. The Investor will receive credit on the full amount of the dividend and will not be required to pay tax on the dividend received.
Ordinary shares where there is no uncalled liability (i.e. the full nominal value has been paid).
A City professional whose job is to decide how fund money is invested.
Fund managers work for investment trusts, unit trusts and pension funds, and have considerable influence in the financial markets because of the weight of money behind them. If they decide to move funds out of a sector, or out of a company in a sector, their decision can affect the price of shares in a way that the decisions of private investors rarely do (except for the smallest stocks).
Deciding which assets (shares, bonds, gilts, cash) the fund should allocate its money to is known as asset allocation.
Some fund managers run active funds which aim to beat the market index by picking the best performing shares. Others run passive funds, which aim to match the performance of an index by tracking it. The management fees charged by active funds are higher than for passive funds because the fund manager has to do more work.