A holding number can be one of below:
HIN (Holder Identification Number)A HIN, being Broker sponsored, commences with an 'X'. If you have an account number from CHESS statement, you will need to add an 'X' to the front of the account number before logging in.  |
SRN (Shareholder Reference Number)A SRN, being Issuer sponsored, commences with an 'I' or 'C'. You will need to enter the 'I' or 'C' followed by the 11 digit number before logging in.  |
Unlisted Managed Fund UsernameUnique identifier assigned to each Unlisted Managed Fund Unit Holder provided by email or post. It can begin with 'IN', 'CP' or 'F' followed by numbers; OR is a 6-11 digit numeric value.  |
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Acceptance
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.
Account
Synonymous with Holding, which is the commonly used term throughout CHESS documentation.
Account designations are generally registered for two reasons:
- Identification Purposes - Account designations may be registered for identification purposes to distinguish between multiple holdings with the same registered name (e.g. "No 1 Account" and "No 2 Account"). The designation should not include any reference to a Trust, TF, ATF or Trustee.
- To appoint a Trustee - Where the beneficial owner cannot be registered as the legal owner, a trustee may be appointed and the trustee's name would be registered on the holding.
Holdings cannot be registered directly in the name of a minor, deceased estate, unincorporated fund or trust (e.g. superannuation fund). In this case, the holding may be registered in the name of the parent or trustee with an account designation.
Accounting Period
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.
Account Number
This is the unique number your bank gives your account.
Accumulation Account
A holder record maintained in CHESS by a broker to facilitate settlement of CHESS approved securities with clients who are not participants.
Ad Hoc
A Latin term meaning improvised and often impromptu.
Ad Valorem
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.
Addressed value payment
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.
Administrator
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.
Admitted Legal Practitioner
An Admitted Legal Practitioner is a Lawyer, Solicitor or Barrister.
Agent
Third party provider, for example, MUFG Corporate Markets is an agent of the Issuer.
Aggregation
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.
All Ordinaries Share Price Index (All Ords)
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).
Allotment
Issue (allotment) of new securities to an Investor and the recording of this issue on the register.
Allowable Difference
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'.
American Depositary Receipts
An American Depositary Receipt (ADR) is a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. Trading in ADR's is a way to buy shares in a foreign company while realizing any dividends and capital gains in U.S. dollars. However, ADRs do not eliminate the currency and economic risks for the underlying shares in another country. ADRs are listed on either the NYSE, AMEX or Nasdaq.
American Exercise
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.
Announcement
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.
Annual General Meeting (AGM)
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:
- the consideration of the annual financial report, directors' report and auditor's report including company performance and future prospects;
- the election of directors;
- the appointment of the auditor; and
- the fixing of the auditor's remuneration.
Shareholders vote on board elections and significant company issues.
Annual Investment Income Report
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.
Annual Report
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
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
Annualised Return is the profit received to the writer of the option contract for buying the shares and writing that contract.
APIR Code
An APIR Code is an identifier for managed funds similar to an ASX Code for listed securities on the ASX.
Application
A form or submission of information by an applicant to apply for securities.
Application Statement and Undertaking
A declaration and indemnity signed by an individual or an officer of a company to enable the reissue of a lost certificate.
Appropriation of Profits
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.
Arbitrage
Arbitrage relates to buying and selling of the same or equivalent securities in different but related markets.
As at Date
Date upon which the relevant information is recorded.
Asset Backing
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.
Asset classes
A broad category of assets, e.g. shares, cash, property.
Assets
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.
Associated Company
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.
ASX Code
A unique code used by the ASX to identify listed companies.
ASX Listing Rules
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.
ASX Settlements and Transfer Corporation Pty Ltd (ASTC)
The Securities Clearing House under the Corporations Law for transactions in CHESS approved securities.
The main functions carried out by ASTC are:
- To provide facilities for electronic clearing and settlement of transactions.
- To establish and administer CHESS subregisters.
- To provide facilities for effecting and registering transfers of CHESS approved securities by electronic means.
- To encourage compliance by Issuers, Participants and other persons with Chapter 7 of the Corporations Law and the ASTC Settlement Rules.
ATO
Abbreviation for Australian Tax Office.
AUD
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).
Audit
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.
Auditor / Internal Auditor
A person appointed and authorised to audit or examine an account or accounts.
Auditors Report
A statutory statement by the auditors of a company to its Investors in the annual report.
Australian Business Number (ABN)
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.
Australian Clearing House Pty Ltd (ACH)
The Australian Clearing House Pty Ltd, clears options and futures traded on ASX and is a subsidiary of the ASX.
Australian Company Number (ACN)
A unique nine digit number identifying a company registered under Corporations Law. This should be replaced by the Australian Business Number.
Australian financial services (AFS) licence
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.
Australian Payments Clearing Association (APCA)
The source of regular updates to the BSB codes currently in use in Australia.
Australian Prudential Regulation Authority (APRA)
APRA is the prudential regulator of banks, insurance companies and superannuation funds, credit unions, building societies and friendly societies.
Australian Registered Body Number (ARBN)
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.
Australian Securities and Investments Commission (ASIC)
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.
Australian Securities Exchange Ltd (ASX)
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.
Australian Shareholders Association (ASA)
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.
Authorisation Cut-off Time
The time by which banks must give final and irrevocable authorisation for Participants funds commitments for that day's settlement.
Authorised Capital
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.
Authorised Security Movement (ASM)
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).
Available Balance
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.
B
back to top ▲Bad Debts
Bad debts are losses which cannot be recovered. They are generally written off.
Balance
This is the how many shares you hold in a specific security. You can check your balance through the Investor Centre.
Balance Date
The completion of an accounting period – typically 30 June for the majority of Australian companies and superannuation funds.
Bank Accounts Debit Tax
A federal government tax on withdrawals from bank accounts by cheque.
Bank Cheques
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.
Bankruptcy
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.
BBS
Broker/Broker Settlement system. Operated by ASX, this system enables Brokers to settle inter-broker obligations nationally.
Bear Market
A market in which prices decline sharply against a background of widespread pessimism. The opposite of bull market.
See also Bull Market.
Benchmark
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.
Beneficial Holder
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.
Beneficiary
A person who gains or benefits from a will.
Beta
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.
Bid
A bid is the “buying” price that an investor is prepared to pay for shares (opposite to offer). See also Offer.
Bill / Bill of Exchange
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.
Blue Chip Securities
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.
Board of Directors
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.
Bonds
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.
Bonus Dividend
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.
Bonus Issue/Shares
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).
Bonus Share Plan (BSP)
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.
Bookbuild
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.
Branch Register
A section of the principal register recording securities held in another state or country.
Broker
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.
Broker Sponsored Holder
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.
Broker transfer (On market transfer)
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.
Brokerage
A Fee paid to stockbroking firms for buying or selling of shares. It is usually calculated as a percentage of the amount you invested.
BSB
Your BSB (Bank State Branch) number is a 6 digit unique number that identifies the bank and branch where your account is held.
Bull Market
A market where it is generally anticipated that the market will rise.
The opposite of bear market.
See also Bear Market.
Business cycle
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.
Business Date
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.
Business day
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.
Business rules
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.
Buy back
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.
C
back to top ▲Call
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.
Call Notice
A letter sent to Investors requesting payment of calls.
Call Option
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.
Cap
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.
Capital
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
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.
Capital expenditure
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)
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.
Capital Gains / Loss
The difference between the sale price of a capital asset and its cost.
Capital Growth
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
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.
Capital Reconstruction
Restructuring of an Issuer's issued capital structure. For example, when a $1.00 share is split into two $0.50 shares.
Capital reductions
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.
Capital Reserve
Profits retained in the business and set aside for specified purposes. This is not available for distribution as a dividend for:
- statutory reasons
- company constitution
- resolution of directors
Cash covered
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
Cash extraction is where investors extract cash from a 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.
Cash flow
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.
Cash issues
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.
Cash settled warrant
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.
Cash settlement
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.
Central Participant
The Participant, within a Participant group, that is designated as the source of the common settlement holding for the group.
Certificated Holding
A Share or Shares for which a physical certificate has been issued.
Certificated sub-register
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.
Certificated to CHESS conversion
This occurs when Investor details are converted from the certificate sub-register holding to the CHESS sub-register holding.
Certificated to Issuer conversion
This occurs when an Investor or Issuer decides to convert from a Certificated holding to an Issuer Sponsored holding.
Certified Copy
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.
Chairperson (Chairman)
The person elected to head a board of directors.
CHESS
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:
- the clearing and settlement of transactions in CHESS approved securities;
- the transfer of securities;
- the registration of transfers; and
- the establishment and administration of CHESS sub-registers.
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:
- Under Broker Sponsorship an Investor can arrange with his/her 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.
- Under Issuer Sponsorship a listed company acts as the sponsor for its own shares, other than those that are already covered by a specific broker sponsorship. No specific agreement is required as the contractual aspects are covered by the company’s rules. The Investor is allocated a unique Securityholder Reference Number (SRN) which covers the Investor’s holdings in that particular company only. This number is also a password that needs to be quoted when orders are placed but it can be used with any broker.
CHESS Approved
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 (CDI’s)
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 Units of Foreign Securities (CUFS) are the equity component of the product and apply to foreign securities only.
- Depository Interests (DI) are the debt/bearer component and apply both foreign and domestic securities.
CHESS Participant
CHESS participants are generally stockbrokers and larger institutional investors who directly interface with CHESS. This enables them to process transactions relating to CHESS holdings.
CHESS Sponsorship and 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.
CHESS statement
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.
CHESS sub-register
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.
CHESS Transaction Identifier
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:
- UIC – 5 numeric – usually the brokers code or the Issuers/offerers UIC
- User defined identifier – 9 characters of whatever the user wishes to use that guarantees uniqueness e.g. a sequential message number
- Accrual Number – 2 numeric usually zero.
Child entity
An entity that is owned by a parent or holding company.
Class
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
Class of options are contracts in the same underlying security of the same type, which can be wither call or put options.
Classified asset
An asset of a kind referred to in paragraph (a) of the definition of restricted securities in ASX Listing Rules.
Clearance
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.
Clearing Account
A clearing account can either be an accumulation account or a settlement account.
Client
A Client is;
- someone who employs or seeks advice from a professional adviser,
- a customer,
- someone under the patronage of another, dependant.
Closed end fund
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.
Closing out
The selling of an option which has been bought in the same series.
Closing purchase
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.
Common Seal
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.
Company
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.
Company Announcements Office
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 within Australia: 1900 999 279.
- For announcements sent from New Zealand: 0800 449 707.
For announcements sent from elsewhere: 61 2 9347 0005 or 61 2 9778 0999.
Company name
The complete name, as reported to the ASX of a listed company.
Company options
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.
Company reported EPS
Companies report within their annual report the basic and diluted earnings per share (EPS) results.
Company secretary
Under the Corporations Law companies are required to employ a Company Secretary who is responsible for the record keeping.
Compliance
The process of ensuring that a company and its employees adhere to relevant laws, statutory regulations, codes and standards, legislative and contractual obligations.
Compliance plan
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.
Compounding DRP Participation
Compound DRP means that your partial participation will increase by the amount of shares you are allotted ie; if you hold 1,000 shares and elect to participate partial DRP of 300 to compound, then if you are allotted 10 shares via the DRP, your partial DRP participation for the next dividend will be 310, unless you notify MUFG Corporate Markets otherwise.
Compulsory Acquisition
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.
Concise financial report
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:
- a concise financial report for the year drawn up in accordance with Accounting Standards AASB 1039;
- the directors' report for the year (see sections 298 - 300);
- a statement by the auditor:
- that the financial report has been audited; and
- whether, in the auditor's opinion, the concise financial report complies with the accounting standards made for the purposes of paragraph (a); and
- a copy of any qualification in, and of any statements included in the emphasis of matter section of, the auditor's report on the financial report; and
- a statement that the report is a concise report and that the full financial report and auditor's report will be sent to the member free of charge if the member asks for them.
Under AASB 1039 a concise financial report must include the following financial statements:
- a profit and loss statement for the financial year;
- a balance sheet as at the end of the financial year; and
- a statement of cash flows for the financial year.
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.
Conditional Acceptance Level
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.
Confirmed Foreign Securities
Securities subject to CHESS foreign ownership restrictions that are available for delivery via a foreign to foreign allocation.
Consideration
Price paid to purchase shares.
Consolidated financial statements
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
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.
Constitution
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.
Contingency
An economic event, gain or loss, that is in the process of occurring or not occurring.
Contingent liability
The possibility of an obligation to pay certain sums dependent on future events.
Contract note
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.
Contract size
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.
Contributing 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.
Controlling Participant
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.
Convergence
The movement of a futures price towards that of the underlying instrument as the contract date approaches.
Conversion
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).
Conversion Ratio
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).
Convertible debentures
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.
Convertible debt 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
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.
Convertible Redeemable Preference Shares
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.
Convertible securities
Security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder.
Corporate Action
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.
Corporation
A term for company. The term is also sometimes used to refer to public sector (government) enterprises which engage in business activities.
Corporations Law
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:
- Companies Act 1981;
- Companies (Acquisition of Shares) Act 1981;
- Securities Industry Act 1980; and
- Futures Industry Act 1986.
Cost of carry
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.
Co-transfer agent
An agent (share registrar) able to issue internationally traded share certificates on behalf of the Principal Registrar.
Coupon
The annual rate of interest paid by the issuer of a bond until maturity.
Court Order Scheme Meetings
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 warrant
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.
Creditor
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.
CREST
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.
Cum
Meaning "with".
Cum (Dividend/Bonus/Rights /Interest)
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.
Cum Balance
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.
Cum dividend
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.
Cumulative preference dividends
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.
Cumulative Preference Shares
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.
Currency
Notes and coins that are the current medium of exchange in a country.
Currency warrants
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.
Current assets
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.
Current Holding Information Statement
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.
Current liabilities
Debts owed by a company which are due for settlement within 12 months. These include creditors and taxes due etc.
Custodian
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.
D
back to top ▲Data Service
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.
Date Payable
The date on which the Issuer makes its dividend or interest payment to Investors.
Debenture
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.
Debt
An obligation by one individual or company to pay a specific amount of money to another party.
Debt Capital
Money raised by selling bonds, the principal and interest on which must be repaid.
Debt Funding
The increase of liabilities to fund operations through the issuing of debentures or bonds.
Debt Security
A security such as a bond or note with specified interest, representing a loan which is repayable at some future date.
Debt-to-Equity Ratio
A measure of a Company's gearing (borrowing) which is calculated by dividing all financial debt by Investors' funds (equity).
Deceased Estate
The assets or holdings left behind by a person (Investor) at the time of death.
Decree Nisi
Court order in a divorce case, which will become absolute unless valid reasons are produced to oppose it within a fixed period.
Default / Defaulter
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.
Deferred delivery (DD)
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.
Deferred settlement
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
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.
Delayed Delivery
Same as Deferred Delivery, but applicable to trades occurring on the New Zealand Stock Exchange.
Delist
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.
Deliverable warrant
The settlement by transfer of the underlying asset upon exercise and after the payments are made.
Delivery Point Identifier (DPID)
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.
Delivery Versus Payment Settlement (DvP Settlement)
The irrevocable exchange of unconditional securities for unconditional same day funds to settle an obligation.
Delivery vs. Payment
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
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
Delta
The measure of the rate of change of an option or warrant's price compared to the change of price of the underlying instrument.
Demand Transaction
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.
De-Merger
The disintegration of a company into separate operations in the expectation that this will enhance performance.
Demutualisation
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
Depository Interests are the debt/bearer component of Foreign Depository Interests and apply to both foreign and domestic securities.
De-Registration (Company)
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.
Derivative
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.
Designated Account
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.
Despatch Date
(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.
Diluted earnings per share
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.
Direct Credit Instruction (DCI)
Instruction given by the Investor stating the account that their interest and dividends are to be paid into.
Direct Deposit / Credit
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
Direct Holding means a CHESS Holding where the Holder is:
(a) the Controlling Participant; or
(b) a wholly owned subsidiary of that Participant.
Directors
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.
Disclosure document
A booklet outlining the risk factors associated with an investment and providing full information for an investor.
Discount
(a) In the case of MUFG Corporate Markets, 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.
Dishonoured Cheque
Due to insufficient funds in the drawer's account, a bank will fail to process (honour) the cheque.
Dissenters
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.
Distribution
The payment of a dividend by a company out of its profits. These are allocated on a per unit basis.
Divestment
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.
Dividend
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.
Dividend amount
Value of last quarterly cash dividend or the number of shares an investor receives for each share owned in a stock dividend.
Dividend Imputation
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.
Dividend Income
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?
Dividend or Distribution Plan
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.
Dividend Rate
The amount of dividend payable per share.
Dividend Reinvestment Plan (DRP)
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.
Dividend Timeline
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.
Dividend type
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.
Doubtful Debts
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.
E
back to top ▲Earnings
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.
Earnings before interest and tax (EBIT)
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 (EPS)
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.
Electronic Holding Statement
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.
Employee Incentive Scheme (EIS)
A label for remuneration schemes developed by Issuers.
Employee Share Plan (ESP)
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
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 MUFG Corporate Markets or to the client for processing. If the VDF is sent to MUFG Corporate Markets for processing, once completed, the Trustee is then advised of the votes and fills out one proxy form for all holdings.
End of Day
The cut-off time for CHESS to accept transactions for end of day processing.
Endowment warrants
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.
Entitlement
Investors are offered an entitlement to purchase additional securities in a new issue on a specific date (record date).
Entity
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.
Entrepot
(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.
Equity
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.
Equity Capital
Capital raised by a company through issuing shares. An alternative to debt funding.
Equity 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.
Equity Security
An equity such as the following:
- a share;
- a unit;
- a right to a share or unit or option;
- an option over an issued or unissued Security;
- a convertible Security; and
- any Security that ASX decides to classify as an equity Security.
Equity warrants
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.
Equivalent fully paid shares on issue
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.
Equivalent fully paid weighted average ('000)
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.
Escrow
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.
Estate
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).
Estoppel
Process of noting a "stop trade" indicator against an Investor’s holding where the related certificate has been declared lost or stolen.
European Style
Options or warrants that are only exercisable on their expiry date.
See also American Exercise (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.
Ex Balance
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.
Ex Bonus, ex bonus date
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 fall 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.
Ex Date
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 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.
Ex dividend date
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.
Ex rights
A share, which is trading such, that buyers do not receive the right to a new issue, usually resulting in a lower price.
Exchange Traded Fund (ETF)
Open ended listed investment fund, that combines some of the characteristics of shares and managed funds.
Exchanged Traded Options (ETO)
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.
Executive Director
A director who is also employed full time by the company.
Executor
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.
Exercise
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.
Exercise Date
The date at which the taker of an option has to settle the amount for buying the underlying security.
Exercise Price
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.
Expiry, expiry date, expiration
The last date an option can be traded or exercised.
Extraordinary General Meeting (EGM)
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.
Extraordinary items
Costs which affect a company's profit (or loss) which are not associated with normal activities and which are not expected to recur.
ESS Tax Statements
ESS Interest: This is any Employee Share Scheme (ESS) shares, stapled securities, rights or options.
Cessation Time: The earlier of cessation of employment, vesting, exercise, or release.
Transaction Date: This is the effective date of when the employee security transactions occurred.
Original Issue Date: This is the date when you originally acquired the ESS Interest.
Transaction Type: There are nine different transaction types that may be listed in this summary. These transaction types are:
- Allocation – An allocation is where you acquire ESS Interests. Allocation transactions are taxable in upfront plans only.
- Available – If you have any other reason for which you cannot legally dispose of your ESS Interest your taxation date may be when this restriction is lifted.
- Cessation – If you cease employment and your ESS Interests become available this may be a taxation point.
- Exercise – If you have rights or options these ESS Interests may be exercised to convert them to shares or stapled securities. This may also be a taxation point depending on the structure of your employee plan and when it was granted to you.
- Expiry – Options or rights to ESS Interests have expired if they have not been exercised before their last exercise date.
- Forfeit – This is where you lose your beneficial interest in your employee plan ESS Interests.
- Vesting – When you gain a beneficial right to your ESS Interests. A vesting date can be a taxation point for ESS Interests in a deferred scheme where ESS Interests are acquired after 1 July 2009.
- Release – This is where your ESS Interests are released and you gain full beneficial and legal ownership of the security. This may be a taxation point for income tax deferred schemes.
- Sale – This is where ESS Interests are sold. If this has occurred within 30 days of your taxation date your sale consideration (minus any costs) will become your income tax liability.
Number of ESS Interests: The number of your securities that were potentially taxable at the transaction date.
Employee’s Costs: This is the amount you paid to acquire the ESS Interest (e.g. option exercise price, brokerage fees) and which is deducted from the market value of the ESS interest to give the total discount for income tax purposes. Please note that if you acquired ESS interests under a salary sacrifice plan using pre-tax salary, the amounts paid to purchase the shares are not considered “employee costs”. This is because your pre-tax salary used to acquire the ESS interests has not previously been subject to tax, and therefore these salary sacrifice amounts are not deducted from the market value of the ESS interest.
Market Value: This market value of your securities is calculated by multiplying the number of securities in the transaction by five business days (up to and including the day before the transaction) volume weighted average price of the underlying listed security.
Cost Base: The cost base of a capital gains tax (CGT) asset is generally the cost of the asset when you acquire full unrestricted ownership of it. However, it can also include certain other costs associated with acquiring, holding and disposing of the asset.
Total Discount: Total discount is calculated by subtracting your costs from the Market Value of your securities at the time of the transaction.
Tax Withheld: If you have not supplied your TFN to your employer you will be required to have tax withheld at the top marginal income tax rate for any ESS Interest that reaches a taxation point in any given tax year.
F
back to top ▲Fair value
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.
FASTER
NZ equivalent of CHESS. See also CHESS Fiduciary. 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.
Final dividend
Dividend paid after the conclusion of the company’s financial year when the profit for the year is known.
Final dividend
Dividend paid after the conclusion of the company’s financial year when the profit for the year is known.
Financial institution
An institution which accepts funds from the public and reinvests in bank deposits, bonds and stocks etc. These include banks and insurance companies.
Financial period ending
Normally, the financial year ended, as released in the company's annual report but can also apply to shorter and half-yearly financial periods.
Financial services guide (FSG)
The MUFG Corporate Markets 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 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.
First Allowable Settlement Date
The earliest Settlement Date for transactions in securities issued as a result of certain Corporate Actions.
FASD
FASD = Despatch Date + Settlement Offset + Fixed Settlement Period
First payment
The First payment is the initial payment (capital plus interest and fees) to purchase the shares via an Instalment Warrant.
Fixed interest Security
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.
Fixed Period Settlement
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.
Flexible Accelerated Security Transfer System (FAST)
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.
Foreign company
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.
Foreign Depositary Interest
The ASX World MUFG Corporate Markets 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 MUFG Corporate Markets 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.
Foreign Individual Ownership Threshold (FIOT)
This is the percentage of shares on issue that any one foreign Investor may hold.
Foreign Ownership Restrictions
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.
Foreign Ownership Threshold (FOT)
This is the percentage of shares on issue that all foreign Investors on the register may hold in total.
Foreign to Foreign Allocation
Transfer of securities subject to CHESS Foreign Ownership Restrictions where a foreign buyer replaces a foreign seller on the Issuer’s register.
Forfeitures
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.
Forty-five (45) Day Rule
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.
Franked Dividend
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.
Franking Credit
A franking credit is a tax credit to a person owning shares for the tax that has already been paid by the issuing company on their dividends. These are also known as franking credits.
Fully covered warrant
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.
Fully Franked Dividend
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.
Fully Paid Shares
Ordinary shares where there is no uncalled liability (i.e. the full nominal value has been paid).
Fund manager
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.
G
back to top ▲GICS (Global Industry Classification Standard)
GICS is an industry classification system developed by Standard & Poor's in collaboration with Morgan Stanley Capital International (MSCI). A company is assigned to a single GICS sub industry according to the definition of its principal business activity as determined by Standard & Poor's and MSCI.
Revenues are a significant factor in defining principal business activity; however, earnings analysis and market perception are also important criteria for classification.
Good Value Claim
A claim made by one party for an error to be fixed by the party responsible.
Government Bond
A government bond is a bond issued by a national government denominated in the country's own currency. Bonds issued by national governments in foreign currencies are normally referred to as sovereign bonds.
H
back to top ▲Held Balance Reference Number
The number allocated by an Issuer to identify the number of securities that remain in a certificated holding after a transfer of securities. Referred to as Marking Number within the EIS.
HIN (Holder Identification Number)
12 characters usually starting with ‘X’ followed by an 11 digit number. The HIN or SRN can be found on the top right hand corner of your holding statement and other shareholder communications. A HIN is a product of a broker sponsored holding and will be needed to be quoted in all dealings with your broker and registry. If you have an account number from a CHESS statement you will need to add an ‘X’ to the front of the number before logging in. For security reasons, you must enter the entire number, including the letter and ' 0's to gain access to the Investor Service Centre.
Important note - your HIN identifies you as the owner of your securities and should be stored securely.
Holding
Units held in a particular Security by an Investor.
Holding Adjustment
A change to the holding balance of a CHESS holding effected by a message transmitted by an Issuer to CHESS.
Holding Company
A company that owns shares in a "subsidiary company". A holding company may or may not run part of the business of a subsidiary company and is the "parent company" of a group of companies.
The subsidiary company is either a wholly owned subsidiary, where 100% of the shares are held by the holding company, or a partly owned subsidiary, where more than 50% but less than 100% of the shares are held by the holding company and is controlled by a board of directors.
Other companies in which significant holdings are held and where some influence is exerted by the holding company are called "associated companies".
Holding Information Statement
A confirmation of an Investor's holding details by security type, as at a specific past date. Issued when a request is received for holding information as at a specific non-current date from an Investor or their representative.
Holding Lock
A holding lock is a facility that prevents securities from being deducted from, or entered into, a Holding pursuant to a Transfer or Conversion.
Hostile Takeover
An intention by one company to take over another, where the target company’s directors are vehemently opposed to it.
I
back to top ▲Imputation credits
See Franking Credit.
Insolvency
The inability of a person or company to settle debts when they become payable.
Instalment warrants
Owning an instalment warrant is similar to having a share on lay-by only better. This is simply because instalment warrants enable investors to take advantage of any dividends or franking credits associated with a share without having to pay for the share in full. Because the instalment warrant costs a fraction of the price of the share and investors are the beneficial owner of the share for the life of the warrant, yields are greatly enhanced.
Instalment warrants differ from classic equity trading calls in that they usually are longer dated. The maturities of instalment warrants usually range from 12 to 18 months but can extend up to 10 years.
Their exercise style can be either American or European. In general, the aim of the purchaser of an investment warrant is to own the underlying share at the end of the warrant ’s term, or at least participate in the return on the underlying over the long-term.
Interim dividend
The dividend declared before annual earnings are established. Some companies pay two dividends per year, the interim dividend and the final dividend. The interim dividend is usually the smaller of the two.
Issued capital
Share capital or Issued capital refers to portion of a company's equity that has been obtained (or will be obtained) by trading stock to a shareholder for cash or equivalent item of capital value. For example, a company can set aside share capital to exchange for computer servers instead of directly purchasing the servers from existing equity.
Issued shares
This is the number of authorised shares that are actually “issued” out to the shareholders.
Issuer
A company or public sector entity which has shares, bonds or other security listed on a stock exchange.
Issuer Sponsorship and Issuer Sponsored Holdings
An issuer sponsored holding is one that is sponsored by the issuer and not by a CHESS participant. Statements are sent to securityholders at the end of a month in which changes have occur to the holding.
J
back to top ▲Joint Account
Any account owned by two or more people.
Joint Tenancy
The ownership of land by two or more persons collectively. On the death of one, the ownership passes to that person’s survivor or survivors, as distinct from a tenancy in common. A joint tenant is one of the co-owners and is not a ‘tenant’ in the sense of ‘lessee’.
Joint Venture
A business arrangement between two or more parties (such as companies or countries) to achieve a mutual objective. All parties have partial control. It is a common way for companies to collaborate on a project(s) without engaging in a full-scale merger. A joint venture is similar to a partnership except that it is not necessarily a continuing one.
Jointly and Severally
A type if agreement that establishes the responsibility for selling the securities in an underwriting. members of an underwriting group agree to buy a certain amount of the new issue and to share liability for the obligations of the other members of the group.
K
back to top ▲Knock On
The subsequent effects on unrelated parties of the failure of a transaction to settle in CHESS.
L
back to top ▲Lapse
Lapse refers to the removal of shares from the register as a result of an Investor not fulfilling their obligation with respect to the shares. Examples include the exercise of options, where the Investor decides not to do the exercise. The shares left over after all option exercise processing is complete would lapse.
Last Close
This is the price per security at the close of business the previous day.
Letters of Administration
Authority granted by a court to a person to wind up the estate of a deceased person who did not leave a valid will.
Lien
The right to hold property belonging to another person as security for the payment of some debt, or the performance of some obligation. For example, the right of the broker over shares until a buying client has paid for them.
Limited liability
The principle that the liability of shareholders for debts of a corporation or limited company is limited to the nominal value of their shares. In other words, their personal assets are not at risk if the company becomes insolvent and is liquidated.
Liquidation
The winding up of a company by a liquidator. The company’s assets are converted into cash and paid to creditors and, if there is any surplus after that, to Investors. The process is akin to the administration of a deceased estate and to bankruptcy, however, a company may not be declared bankrupt under the Bankruptcy Act, but must be wound up in accordance with the Corporations Law.
Most liquidations are compulsory and relate to insolvent situations. However, liquidations can also be voluntary and represent a reorganisation of a group structure. Defunct companies with no assets or liabilities can be struck off without being formally liquidated.
Liquidator
A person appointed, usually by a court, to conduct the winding up of a company and the liquidation of its assets.
Listed Company
A company whose securities have been admitted to the stock exchange.
Listed Stock
Approved securities for admission to the Official List and for trading on the Stock Exchange. Listed securities are usually more liquid than unlisted ones owing to the existence of the exchange. Also known as Listed Securities or Tradeable Securities.
Listing Date
The date that an Issuer lists on the stock exchange, where their shares are available to be bought and sold by the general public.
Live Class
A class of security which is tradeable on the Australian Stock Exchange.
Lodgement
The act of lodging or process of being lodged.
M
back to top ▲Market Capitalisation
The worth of a company as set by the stock market. It is calculated by multiplying the total number of shares on issue by the price per share.
Market Participants
Market participants are those companies that meet the ASX’s requirements. They are more commonly referred to as Stockbroking organisations and there are currently 80 participants throughout Australia.
Market Price
In the context of the Australian share market, Market Price represents the last reported price to buy or sell a security on the open market. It is the closing price on SEATS, excluding special crossings; overnight sales and exchange traded option exercises. Alternatively, it is the highest price, which a buyer willing, but not compelled to buy would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Market Value
The current value of an item or security, as opposed to its book value.
Marketable Parcel
Marketable Parcel, is based on the definition in ASX's Business Rules in relation to:
(a) Equity Securities and redeemable preference shares with a fixed and certain date for redemption, but not rights to subscribe for Equity Securities, a parcel of securities of not less than $500 based on:
(i) the closing price on SEATS, if the equity securities are quoted; or
(ii) the price paid on issue if the equity securities are unquoted.
(b) Rights to subscribe for Equity Securities, a parcel of rights which, if taken up in full, would result in a parcel of Equity Securities which would not be less than $500 based on:
(i) the closing price on SEATS of the Equity Securities at the time of purchase of the rights, if the Equity Securities are quoted; or
(ii) the total application moneys payable in relation to the exercise of the rights if the Equity Securities are unquoted.
(c) Loan Securities other than redeemable preference shares with a fixed and certain date for redemption, 1 security with a face value of not less than $100.
Marking
A notation placed upon a transfer indicating that there is a share certificate held by the Share Registry to support the transfer.
Marking Number
A number used in tracking bonds and marking certificates.
Maturity
The redemption date; the date on which a fixed interest security is due to be repaid by its Issuer.
Member
An Investor. The register of Investors is called the Register of Members.
Memorandum of Association
A document under earlier legislation drawn up on creation of a company, setting out its initial objectives, capital, name and address. As this forms part of a company’s constitution, any changes need to adhere to the Corporations Act 2001.
Merge
The joining of two or more identical shareholdings.
Merger
A form of corporate restructuring in which two (or more) companies combine all or part of their operations. Unlike takeovers, mergers are usually negotiated by the management of the companies concerned. A merger usually implies that the companies (or operations) are roughly equivalent in size.
Minimum Capital Requirement
The Australian Prudential Regulation Authority requires that each insurer maintain sufficient capital to enable its insurance obligations to be met under a wide range of circumstances.
Mutual Fund
A term to describe Managed Investments in the US and are similar to unit trusts in Australia.
N
back to top ▲National Guarantee Fund (NGF)
The National Guarantee Fund provides compensation to investors who have claims arising from dealings with ASX Participating Companies.
ASX maintains investor confidence in the integrity of its markets by regulating the conduct of market participants and monitoring market activity for any irregularities.
National Personal Insolvency Index
The Insolvency and Trustee Service ("ITSA") is responsible for maintaining an index containing information on proceedings and administrations under the Bankruptcy Act, 1996. This index is called the National Personal Insolvency index.
If it is a voluntary bankruptcy (debtor's petition), an extract from the National Personal Insolvency Index (NPII), is sufficient proof to show that the person is bankrupt, and who the trustee is.
Net Assets
The total assets of a company (current assets plus fixed assets) less its current liabilities.
Net Current Assets
Current assets minus current liabilities; also defined as working capital.
Net Profit
The gross profit of a company (total turnover of products sold less costs to purchase or manufacture) less all other expenses. When net profit figures are quoted, the author usually makes it clear whether the figure is before or after tax. In company accounts, the word 'net' is often dropped, so that you simply have 'Profit before tax' and Profit after tax'.
Net Tangible Asset Backing (NTA)
The net worth of a share, the theoretical value of the net assets attributable to each ordinary share on issue. It is calculated by dividing the estimated value of the company (total assets less liabilities) by the number of shares on issue. A company can have poor earnings per share rate, but still have solid asset backing.
New
Recently issued shares are quoted as 'new' when they do not rank equally with existing shares in terms of dividends.
Nil Paid Rights
Rights (entitlements) that have not been exercised (paid for) by the Investor.
Nil Paid Rights Register
A register of issued rights jointly maintained by the Issuer and CHESS to enable rights trading to be brought in line with fixed settlement and DvP concepts.
No Liability Company
No liability companies are public companies that have no statutory or contractual right to recover unpaid calls on partly paid shares. Such companies have ‘No Liability’ or ‘NL’ in their name. The activities of a no liability company must be confined to mining.
NOAR- No Annual Report
Indicates whether the Investor requires none, summary or full annual reports to be sent each year.
Nominated Proxy
A person appointed to vote at a meeting on behalf of another Investor.
Non Broker Participant (NBP) A party other than the Australian Stock Exchange (ASX) member broker that has been admitted to be a CHESS participant.
The party may be a:
- Nominee Company
- Margin Lending Company
- Trustee Company
Non ranking class
A class of security that do not rank equally with ordinary shares.
Non Renounceable Rights
A rights offer that may only be taken up or forfeited, and cannot be traded on the market.
Non-tradeable balance
Securities that cannot be bought or sold on the stock market.
Non-Value
A settlement in which the Clearing House gives effect to the delivery of securities but does not give effect to a corresponding payment. For example, this may occur when parties settle the payment side of a trade, externally to the Clearing House and transfer the required uncertificated securities to the Clearing House.
Note
A loan made to a company at a fixed rate of interest with the right to be either redeemed (i.e. repaid by the company) for cash or converted into ordinary shares at a predetermined date or within a certain period.
Noting
A noting of information against an Investor indicating some special circumstance. For example, a power of attorney, notification of death of a beneficiary, noting of incorporation for companies.
O
back to top ▲Offer
In the stock market, offer means that a seller is willing to sell a share at a given price.
Offer Period
In relation to a Takeover Bid, the offer period is the period for which offers under the bid remain open; however in relation to a Scheme, the offer period is from the date an announcement of intention to propose a Scheme is first received by the Exchange until the date on which the Scheme is effected.
Offering Circular
An abbreviated prospectus for a new security listing. Delivered to individuals and brokerage houses, these documents are issued to arouse interest in the new issue.
Offeror
Offeror can be:
- The Issuer making the offer to Investors or potential Investors
- The party making a bid in a takeover.
Official List
The list of securities which have obtained a formal listing on the main market of an exchange.
Official Seal
The name for a copy of the common seal to be used outside the State or Territory where the common seal is kept. It gives an exact facsimile of the common seal with the addition on its face of the name of every place where it is to be used.
Off-Market Buyback
An Off-market Buyback is when an Issuer wishes to buy back it’s own shares from Investors, but will approach them personally (by mailing) as opposed to making an announcement to the market (On-market Buyback). An Issuer will decide to buy back shares in an attempt to increase share price and in some cases to reduce the number of small Investors on the Register.
When shares are bought back by the client they are cancelled and no longer exist, therefore reducing the overall number of shares on the company’s register.
Off-Market Transfer
Relating to a transaction, such as moving securities from one holding to another without using a broker outside a formal market. Off-market transactions are conducted through negotiation rather than an auction system.
On-Market Buyback
An On-market Buyback relates to the Issuer taking the Buyback offer to the market, as opposed to an Off-market Buyback, which only approaches the existing Investors.
On-Market Transfer (Broker transfer)
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.
Options
A security, which gives its holder the right but not the obligation to acquire a share in a company at a specified price on a stipulated date or, sometimes, at any time up to a maximum date. An option which is not exercised by the latest possible exercise date lapses and becomes worthless.
Options are usually transferable and can be traded rather than used as a means to obtain the underlying security. An option to buy is a call option. An option to sell is put option. One to buy or sell is a double option.
Options Clearing House Pty Ltd (OCH)
A subsidiary of ASX, this is the clearing house for exchange traded options. OCH guarantees performance of contracts and is responsible for daily margining, exercise notices and monitoring the financial status of brokers.
Ordinary Shares
The most common class of security, which carry voting rights and entitlement to dividends. Ordinary shares form the bulk of a company’s capital. All companies listed on the stock exchange have to have ordinary shares. They may be fully paid or contributing.
If the company is wound up (liquidated), ordinary Investors generally rank behind preference Investors and secured creditors, including debenture holders. They also rank behind secured creditors for dividend payments.
Out-of-the-money
When the exercise price of an option is above the current market price of the underlying asset
Overseas Dividend Reinvestment Plan (OSDP) Overseas Dividend Reinvestment Plan is similar to a Dividend Reinvestment Plan (DRP) but is offered by Issuers that have Investors on registers outside Australia, such as United Kingdom or New Zealand. In such cases the Investors are able to obtain dividend payments in foreign currency and or reinvest in the normal way as per DRP.
Oversubscribed
This is a situation in which the value of applications received for a new share issue, exceed the amount available to be allocated. In share issues, oversubscriptions are not usually accepted and allotments may be scaled back and are made at the discretion of the company. In fixed interest issues it is common for a specific level of oversubscriptions to be accepted.
P
back to top ▲Paid Rights
Nil Paid Rights that are transferred to paid rights when the Investor makes their payment for the nil paid rights. This allows the registry to identify Investors who have paid for their rights and those who have not, so that the short fall can be easily determined when the issue closes. The nil paid rights are usually tradeable on CHESS (if the issue is renounceable).
Paid up capital
The portion of a company’s shares already issued which are actually paid up. In other words, the subscribed capital less any amounts yet to be called (and also less any calls in arrears).
Par Value
Nominal or face value that applies to fixed interest securities and which was formerly attributed also to each share. In Australia, the par value concept was abolished by amendments to the Corporations Law introduced on 1 July 1998.
Prices in excess of a par value are said to be at a premium. Prices below a par value are said to be at a discount.
Parent Security
An existing security. For example, during a bonus issue, Investors who have holdings of the existing security (i.e.. the parent security) will be allocated bonus shares (depending upon the terms of the bonus issue).
Pari passu
Ranking equally. For example, in a new issue of shares which carry equal rights with existing shares they are said to rank pari passu.
Participant
A Participant in the Clearing House is an entity which;
- meets the participation criteria of the Clearing House;
- abides by the rules of the Clearing House;
- may settle its transactions with an ASX member Broker through the DvP/settlement regime of the Clearing House; and
- may authorise and direct movements of uncertificated securities under its control through the Clearing House.
Participant Group
A grouping of associated Participants within CHESS that enables related Participants to direct settlement to a designated holding belonging to a central Participant.
Participant Identifier (PID)
Participant Identifier is a five digit code assigned to Participants by the ASX that appears in all messages exchanged between the registry and CHESS and also appears on many application and transfer forms.
Participant Securities Movement
Broker Participants and NBPs are only permitted to initiate subregister movements (transfers and conversions) when the CHESS subregister is open. Conversely, Participant Securities Movements are not permitted if the CHESS subregister is either closed or suspended.
Participating Dividend
A dividend paid to preference shareholders in addition to the normal preference dividends payable.
For example, Preference shares in XYZ Ltd receive a fixed 10c dividend. One year, the board announces a 12c dividend on all shares. The 2c premium over the preference dividend is known as the Participating Dividend.
Participating Preference Shares
A type of preferred stock that gives the holder the right to receive dividends equal to the normally specified rate that preferred dividends receive as well as an additional dividend based on some predetermined condition.
The additional dividend paid to preferred shareholders is commonly structured to be paid only if the amount of dividends that common shareholders receive exceeds a specified per-share amount.
Partly Paid Shares
These are shares, which have been issued with only a portion of the nominal value paid on application. The outstanding money is payable in one or more calls, at times set out at the time of issue, in the terms of the issue, specified by the Issuer. Similar to Contributing Shares.
Payment Instruction (PI)
Banking details (direct credit or third party) supplied to the registry by the Investor instructing payment of dividends.
Payment Rejections
After (Dividend) Payments have been carried out, there are some support functions which follow.
These functions include dealing with payment rejections where the bank has rejected a direct credit payment; replacing cheques which have gone astray in the mail and reconciling the amounts paid to Investors with the amounts drawn from the Issuer’s bank account.
Person
A person is defined as being an individual, company, joint application, trust, deceased estate, minor, partnership, club, or superannuation fund.
Placement
Where a company makes an allotment of shares, debentures, etc directly to new investors or large institutions rather than existing investors.
Policy
Concise statement of course of action at the corporate level.
Pooled Development Fund (PDF)
Pooled Development Funds (PDFs) were established through the Pooled Development Act (1992) to encourage investment in small and medium sized Australian companies. Although most of the investments PDF make are unlisted companies, some PDFs also hold shares in unlisted companies.
These companies are normally in the formative stage of development, so most PDFs are considered high risk investments and as such enjoy special tax concessions, including capital gains tax exemption for gains made on PDFs, and concessional tax treatments on dividends.
Dividends received from a PDF will generally be exempt from tax however the investor has the option to include their PDF dividends as assessable income. The choice will depend on their own individual tax circumstances.
PDFs are limited as to what type of investments they can make. These limitations include:
- Investments must be in Australian companies
- The PDF must purchase at least 10% of a company's shares
- The company must be smaller than $50 million in capitalisation
- The company cannot be in the retail or real estate business.
Pools of Shares
Allocating groups of shares for different groups of Investors (for example, institutions, general public) in a Corporate Action.
Portfolio
The collection of investment holdings of a particular Investor usually with reference to its composition i.e. the mix of different classes of securities, such as bonds, property, shares and cash, or if in a single asset class, the mix of different sectors and stocks.
Power of Attorney
A legal document granting authority to another individual or company (the recipient) to act on behalf of the person granting the authority (donor).
Preference Shares
Preference shares are limited to a fixed dividend but have priority over the ordinary shares in regard to a company’s assets in the event of liquidation. They rank above ordinary shares, but below creditors and debenture holders, for claims on assets and dividends.
They can take various forms, for example, with or without cumulative dividend entitlements, redeemable or irredeemable, convertible or non-convertible.
Price Earnings Ratio (P/E Ratio)
It is commonly used to measure how attractive a share is to Investors, and to compare shares in one company with another. It shows the number of times the share price covers the company’s earnings per share (EPS). The lower the ratio relative to the average of the sharemarket, the lower the (market’s) profits growth expectations. It should be noted that dividing a historical earnings figure into a current market price could be misleading.
Calculated by: Market price of shares / Earnings per Share = P/E Ratio
Primary Owner
Primary Owner is identified as the main Investor for an unlisted managed fund holding. For joint holdings, there will be one Primary Owner along with one or more co-owners. Name of the Primary Owner for a holding can be found under Investor Details page of your unlisted managed fund holding. Only a Primary Owner of an unlisted managed fund can add/update Address details and Communication preferences (Email & Phone number).
Principal Activities
The principal activities of a company as reported in the annual report.
Principal Register
The main register of an Issuer usually held in the state of incorporation and which records the transactions on all the various branch registers.
Priority Issue
A priority issue is an offer made to holders of an existing security (termed the "parent security") of a non-transferable priority entitlement to take up new securities in a float or an issue of new securities.
Holders of the parent security are given priority for a limited number of the new securities. The priority entitlement is not pro rata to existing holdings, but may be loosely determined by the registered holdings of the parent security as at the specified record date.
Holders of priority entitlement may:
- accept the offer, and take up the new securities by lodgement of an application form and payment of application moneys; or
- allow the entitlement to lapse.
Priority entitlements cannot be sold or transferred to another party. Applications can also be lodged on a non-priority basis and/or additional units over and above the priority entitlement applied for. If the issue is oversubscribed, the Issuer selectively reduces or rejects applications and refunds application moneys.
As priority entitlements are not transferable, CHESS does not maintain priority entitlement holdings. After determining priority entitlements based on holders of the parent security on the notional record date, the Issuer forwards priority application forms to all eligible holders.
Priority applications are lodged directly with the Registry. The new securities are issued on the subregister selected by the applicant (i.e. CHESS, Issuer Sponsored or Certificated subregisters, depending on which subregisters are supported by the Issuer). ASX trading in the security does not commence until after allotment and dispatch unless a pre-quotation market has been established.
Private Company
A proprietary limited company, which cannot offer shares to the general public. Shareholdings are restricted to a small number of Investors and restrictions are placed upon transfers of shares. It is a non public company.
Pro Rata
Proportional(ly).
Pro Rata Issue
Offered on a pro rata basis within a specific class to all holders of those securities.
Probate
Authority granted by a court to a person (the executor) to wind up an estate of a deceased person.
Procedure
Set of steps outlining the tasks involved in performing a function or activity in a process.
Procedure Guidelines
A subscription document that provides CHESS users with guidelines to assist their internal operations under CHESS.
Process
Series of activities that take place over time and have an identifiable purpose or result. Usually involves more than one department or team.
Profit
In common usage it is net profit after tax and minority interest. More specifically, it is revenue less any costs. There are usually a number of different measures of profit such as operating profit, earnings before tax, and pre-tax profit.
Property Trust
A type of collective investment (investors pool their money together and a professional manager operates the scheme) which invests in residential or commercial properties.
Property Trusts
A property investment vehicle that in the ordinary course of business invests in commercial office buildings, retail shopping centres, industrial buildings and other investment property for the purpose of earning a rental income and long-term capital growth for investors.
Proprietary Company
Also known as private companies. They are usually owned by a small number of Investors and there are restrictions on the ability to transfer shares.
Prospectus
A legal document issued when a company proposes to raise funds from the public. It invites applications or offers to subscribe for securities of an Issuer or trust. The content of a prospectus is subject to the regulations of the Stock Exchange and the provisions of the Corporations Law.
A prospectus provides the background, financial status and management status of the company or fund. It must be made available to all interested Investors in advance of their investment, when an offer is made to the public.
Proxy
A written authorisation given to a person (the donee) to act on behalf of an Investor (the donor), especially in regard to attending and voting at an Investors meeting. The proxy form may be personalised and bar-coded for subsequent processing of votes and attendance registration purposes.
Proxies generally are accepted up to 48 hours prior to the meeting.
Fund management agreements often delegate the authority to the fund manager to exercise proxy votes on behalf of the client.
Public Company
Public companies are usually owned by a large number of Investors. They can issue shares and debentures by way of public issue and there are usually no limitations on the transfer of shares.
Put Option
A contract which gives the Investor the right (without the obligation) to sell a fixed number of shares (usually 1000) at a fixed price on or before the expiry date.
Put Warrant
A warrant which gives its holder the right to sell an underlying instrument (e.g. a share), and which would therefore normally be used by an investor who thought the price of the underlying asset was due to fall.
Q
back to top ▲Quotation
Often referred to as bid asked, or quote. The bid is the highest price anyone has indicated that he or she will pay for a security at a given time, and the asked is the lowest price anyone will accept at the same time. Also known as the bid offer.
R
back to top ▲Ratio
One number or amount considered in relation or proportion to another. In oscar, the ratio is shown as Ratio Held: Ratio Given.
For example, if for every 2 shares held the Investor is entitled to purchase one additional share, the ratio would be 2:1.
Receiver
A person appointed, either by a court or by a creditor to take charge of the affairs of a company (which has run into financial difficulty) until its debts are paid. The company is thus in receivership.
Receivership
The condition of a company that has had a receiver appointed to administer it. The receiver’s responsibility where he/she is appointed by a creditor, is to realise the belongings of the person or company and try to pay off the debts of the Securityholder.
Unlike liquidation, receivership does not necessarily lead to cessation of the company’s business. The receiver may allow for the company to continue trading.
Recognised Trustee
A trustee company under the ASTC Settlement Rules and any other trustee approved by ASX for the purpose of the listing rules. Note: Under the ASTC Settlement Rules a trustee company means a trustee company within the meaning of State or Territory Trustee Companies legislation or a Public Trustee of a State or Territory.
Reconciliation
A payment list (mostly for dividend payments) is checked to see which cheques have or have not been presented to the Issuer’s bank for payment. This also involves the replacement of lost of stale cheques and the preparation of unclaimed money returns.
Reconciliation is also performed at the time of an issue of shares to ensure that application money for the number of shares allotted has been received and banked, and that the computer has recorded the correct total of shares allotted.
Reconstruction
A change to the existing capital structure of a company. An Issuer may adjust its capital by reconstructing its shares into units of greater or lesser par value. This includes share splits, consolidations, capital reductions (partial repayments), schemes of arrangement and name changes.
Record Date
The date on which the Issuer closes its register for the determination of eligible Investors for the current dividend or interest payment or any other Corporate Action. Shares purchased after the record date do not participate in the dividend or interest payment. It is also known as a books close date.
Redemption
Paying off or cancelling a debt. For example, government bonds are redeemable at face value upon maturity i.e. the government pays you, the lender, your money and redeems its debt.
Register
A record, which holds the details of shares, issued to Investors for a specific Issuer. There is usually only one Australian register for each Issuer and this is based on the state of incorporation for example, NSW, VIC, QLD. Some Issuers also have overseas registers when they are listed in foreign countries such as NZ and UK.
Registrable Title
Only a legal entity is permitted to be registered as a holder of securities. A legal entity is an individual person, a joint holding of up to three holders, a body incorporated under the Australian Corporations Law or overseas equivalent, or a body incorporated under an Australian or overseas Act of Parliament.
Registrar
The organisation that maintains a company’s share register. For example, MUFG Corporate Markets (AU) Limited.
Registry
The place where the maintenance of the register takes place. Most frequently this is the office of a professional share registrar.
Registry Transaction
A transaction initiated by a Registry to cause a movement on a subregister holding. The transaction is processed within time constraints published in the Clearing House business rules. The transaction does not involve a transfer of funds though CHESS.
Reissue
Issue of certificate to replace one declared lost or damaged where a change of name is recorded or where a balance is left after a sale.
Related Company
Company related through common ownership.
Related Participant
The Participant, a member of a Participant group, that may optionally direct settlement to a common settlement holding within an associated central Participant. The Participant is also a member of a group which allows single-entry transfers and reporting extensions within the group.
Removal
Change from one register location to another, for example ACT to NSW. This is sometimes called a shunt (especially for overseas companies.
Renounceable Rights
An offer issued by a corporation to shareholders to purchase more shares of the corporation's stock (usually at a discount). Renounceable rights have a value and can be traded.
Renunciation
Renunciation occurs when an existing Investor sells entitlement to shares in a new issue to another person. Renunciation is the act of renouncing entitlements from a share issue to a purchaser willing to pay for the transfer of rights.
Replacement / Duplicate Transfers
A transfer marked to cover a lost or stolen transfer. This only applies to companies that are not on CHESS.
Reserve
An amount of tax-paid profits, or other surpluses separately designated in Investors' funds as being set aside for a particular or general purpose, or arising from a particular source. The profit or surplus set aside may be prohibited by statute from being distributed as a dividend, or the directors may intend that the amount is not available for distribution at least in the near future.
The term also applies to the excess of a provision over that reasonably necessary for the purpose and to surpluses arising on the upwards revaluation of non-current assets. Sometimes all accumulated profits and surpluses are generally described as reserves.
Reserve Capital
That part of the capital of a business that has not yet been called up. It is thus a reserve, which can be drawn on in case of need.
Reset Date
The reset date which relates to Rolling Instalments is the date upon which the Final Payment for the Loan Amount is reset for the next period.
Residency Indicator
An indicator that is used for Investors of securities subject to Foreign Ownership Restrictions to indicate whether the Investor is to be treated as Foreign, Domestic or both for the purposes of calculating the foreign ownership level in the register.
Residency of Holder
The domicile of a holder of securities subject to CHESS foreign ownership restrictions for the purposes of calculating the level of aggregate foreign ownership. An essential element in the processing of foreign to foreign allocations.
Residual Cash Balance
The balance of cash remaining after the total amount available for reinvestment (current payment plus residual carried forward) has been divided by DRP strike price with the result rounded down to a whole number.
The residual balance is carried forward until the next payment, added to the payment entitlement and the total amount used in the calculation of the allotment.
Resolution
An official document representing an action on the part of the board of directors of a corporation.
Responsible Entity
The entity that operates a managed investment under the constitution.
Restricted Securities
Securities which have a trading restriction on them.
Defined in the Listing Rules as:
a. Securities issued by an entity in consideration of, or in connection with, its (or a related party's) acquisition of any of the following:
- an interest in a mining exploration area or similar tenement or interest.
- an interest in intangible property that is substantially speculative or unproven, or has not been profitably exploited for at least two years, and which entitles the entity to develop, manufacture, market or distribute the property.
- an interest in an asset which, in ASX's opinion, cannot readily be valued.
- an interest in an entity the substantial proportion of whose assets (held directly, or through a controlled entity) is property of the type mentioned in this paragraph.
b. Securities issued by an entity in consideration of, or in connection with, a service provided to the entity (or to a related party) in relation to either of the following:
- the entity's formation, promotion, or listing; or
- the entity's offering of securities to the public.
c. Securities issued for cash (or equivalent) if the person received the cash (or equivalent) for the assets or services mentioned in (a) or (b).
d. Securities issued to a holder of restricted securities in substitution for them as part of a reorganisation of capital.
e. Securities issued under a bonus issue in relation to restricted securities.
f. Securities issued on the conversion of restricted securities.
g. Securities that partly paid restricted securities become when the holder pays any of the outstanding amounts.
h. Securities that, in ASX's opinion, should be treated as restricted securities. For example, ASX is likely to treat as restricted securities, those securities held by a current director or promoter (or their associates) in an entity that has been removed from the official list that were on issue at the time the entity was removed. ASX is also likely to restrict such securities sold by a current director, promoter or their associates.
Retail Investor
An individual who purchases small amounts of securities for him/herself, as opposed to an institutional investor. Also called individual investor or small investor.
Returns / Return on Investment (ROI)
The return on investment (ROI) or just return is a calculation used to determine whether a proposed investment is wise, and how well it will repay the investor. It is calculated as the ratio of the amount gained (taken as positive), or lost (taken as negative), relative to the basis.
Revenue Earnings
What a company makes in monetary terms from its business for goods and services supplied by it during a financial year. It is also referred to as "revenue from operations", "turnover", "operating revenue" or loosely known as "sales".
Rights
The entitlement given to existing Investors to subscribe for new shares in the Issuer at a specific price and by a specific date. Rights are issued pro rata to Investors and may be renounceable (able to be traded) or non-renounceable (non-tradeable).
Rights Issue
An offer of additional shares to existing Investors at a pre-determined ratio to registered holders as at the record date. Normally Investors do not pay brokerage or stamp duty. The decision to take up the entitlement is optional.
Rollover
During repayment of funds for securities that have a finite life (such as debentures and convertible notes) Issuers may offer holders the option to roll over the maturing security. The security (debenture or loan) is replaced by a further security (debenture or loan) by negotiation with the party to whom the money is owed.
Routine Transaction Statement
A statement sent by the Issuer outlining an investors transactions.
S
back to top ▲Scaleback
Scaleback is the Corporate Action used to scale down the number of shares or rights an Investor may be entitled to. This occurs when an Issuer has oversubscribed in an issue of shares, and may need to scale down the number of shares issued per Investor. This scaleback is at the discretion of the Issuer.
Schemes of Arrangement
Schemes of arrangements are legal arrangements between companies and their Investors or creditors to vary the rights of the parties, subject to the consent of a court. Some schemes are used to effect compromises between debtors and creditors. Others are used to effect capital repayments or other reconstructions. Schemes affecting several companies can be used to effect mergers.
Scrip
Abbreviation for subscription, or a certificate that denotes entitlement to a parcel of shares. It is synonymous with Share Certificate.
Scrutineer
An independent observer that monitors the proceedings during an annual general meeting to ensure that they have complied with legal requirements and company policy.
Secondary Market
The trading of shares amongst investors which does not involve the company itself. When people talk about trading on the stock market, they are generally referring to the secondary market, which involves brokers, market makers and an exchange providing a technical platform for trades to take place. The companies and their shares are the subject of the trading, but they are not directly involved as participants.
The primary market refers to the situation in which a company sells newly issued shares to investors, possibly in an IPO, or places them with institutions.
Section 1071B
A section 107B (previously Section 1091) is a form that is sent to the Executors of an Estate and is required where securities are registered in a different state to the state that the probate has been granted.
Securities Clearing House (SCH)
The function of the Securities Clearing House (SCH) is to facilitate the exchange and payments of securities.
It provides facilities for the electronic clearing and settlement of transactions in CHESS Approved Securities, maintains CHESS subregisters, and to encourage compliance by Issuers. The SCH is owned and maintained by the ASX Settlements and Transfer Corporation Pty Ltd (ASTC).
Securities Subject to CHESS Foreign Ownership Restrictions
Securities subject to restrictions on the aggregate level of Foreign Ownership. Not all securities subject to Foreign Ownership Restrictions are included in CHESS processing.
Security
The paper right to a (generally tradeable) asset. The term is frequently used as a loose label to refer to all shares, debentures, notes, bills, government and semi-government bonds etc, which are traded on the stock exchange.
An asset pledged to ensure the repayment of a financial obligation (e.g. loan), and forfeited in the event of default on that obligation.
Securityholder
A person (which can be an individual, partnership or company) who buys a portion of a public or private company’s capital. By doing so that person becomes a shareholder in that company’s assets and receives a share of the company’s profit in the form of dividends.
Sequestration Order
This is the court order given when creditors have petitioned to have a person made bankrupt. The person is bankrupt from the time of the creditors making the sequestration order.
Service Level Agreement
An agreement between MUFG Corporate Markets and the Issuer regarding the services available in the Standard Registry Agreement and the performance measurements agreed upon for selected services.
Settlement
The completion of a transaction, whereupon securities and, where appropriate, corresponding funds are transferred.
Settlement (and Settlement Run) are also used in CHESS to refer to the operational process in Phase 2 that runs each day to effect the movement of securities and the exchange of funds.
Settlement Account
A holder record maintained in CHESS by a participant non-broker to facilitate settlement of CHESS approved securities with other participants.
Settlement Cut-off Time
The time by which non-value settlements are to be submitted and matched in the system for the current settlement cycle.
Settlement Date
The date on which the final settlement of securities transaction takes place and the final payment is made. It is also referred to as T+3 as the settlements must occur on (or prior to) the third business day after the date of the transaction.
Settlement HIN
Identifies the target or source holder on the subregister under which the securities of a transaction are to be delivered to or from as part of the settlement process.
Settlement Holding
Identifies the target or source holding on the subregister where the securities of a transaction are to be adjusted as part of the settlement process.
Settlement Instruction
A generic CHESS term to group messages involved in the CHESS settlement process. The group comprises:
- Netted Broker/Broker Obligations
- Broker/NBP settlement trades
- Dual Entry Settlement Transfers
- Single Entry Settlement Transfers
- Blocked Broker/Broker Trades
Settlement Offset
A time extension used to calculate the First Allowable Settlement Date. The Settlement Offset is an allowance to assist holders of certificated securities to discharge their delivery obligations on the due date. Currently, the offset has a value of one business day.
Settlement Tolerance Amount
The tolerance accepted for the matchable field Settlement Amount. The tolerance value is $1, with the lower of the two settlement amounts adopted in settlement.
Settlement Transaction
A transaction submitted by a Participant to cause a movement of securities from one holding on the CHESS subregister to another and which is directed to a specific settlement run.
Severally But Not Jointly
i) A type of agreement that establishes the responsibility for selling the securities in an underwriting. Members of the underwriting group agree to buy a certain amount of the new issue severally but do not agree to joint liability for shares unsold by other members of the group.
ii) More generally, when members of a group agree to certain obligations individually, but do not share responsibility for the obligations of other members of the group.
Share Certificate
The physical document recording ownership of shares. It contains an identifying number and states that the person named is the registered holder of securities. Certificates are no longer in general use and are also known as Scrip.
Share Purchase Plan (SPP)
Share Purchase Plans may be offered to Investors by some Issuers. The SPP allows Investors to top-up their holdings according to specified rules. These shares are usually offered at a market-related price but free of stamp duty and brokerage.
These arrangements sometimes supplement conventional dividend reinvestment plans and sometimes take their place. These plans directly help Investors who want to top up their holding and also increases the popularity of the company in the marketplace thus probably leading to a slightly higher share price.
Share Splits
A share split is the subdivision of shares into a larger number of shares each with a correspondingly lower market value. The total value of any Investor’s holdings is not affected by the split. Sometimes splits are made to increase the marketability of a security.
Shareholders Information Meeting (SHI)
A ShareHolder Information (SHI) Meeting is a meeting of an Issuer’s members (the Investors). A public company can hold a SHI Meeting whenever one is required such as when there are issues that need to be brought to the Investors. As there are no votes or elections and therefore no proxies to process, reports are not generated for these meetings.
Shares
The ownership of part of a company. It is a contract between the issuing company and the owner of the share, which gives the latter an interest in the management of the corporation, the right to participate in profits and, if the company is dissolved, a claim upon assets remaining when all debts have been paid. The majority of shares issued are either ordinary or preference shares. Company’s can also issue deferred shares.
Shortfall
The difference between the expected amount and the amount received. For example, a borrower could issue securities to the market hoping to raise $1 million, but sell enough to raise only $900,000, which leaves a shortfall of $100,000.
Shunt
The method of moving shares from one register location to another e.g. NSW to ACT or NZ to NSW. Also known as Removal.
Single Entry
Transactions (both demand and settlement) effected by a sole delivery Participant.
Special Dividend
A dividend paid in addition to the usual interim or final dividend. This dividend is a one off distribution and is paid at the discretion of the Issuer.
Special Transaction Statement
Defined in the ASX Listing Rules as a statement of transactions in an Investor’s account sent by the Issuer, at the request of the Investor.
Split Registers
Shareholdings on more than one register for the same Investor e.g. Victoria and NSW.
Split Vote
It is referred to splitting of votes when the holding is registered under joint partners.
Sponsor The broker with whom an Investor completes an agreement to establish an uncertificated holding on the CHESS subregister.
Sponsored Holder
An Investor who is sponsored by a participating broking firm. The holdings and details of the Investor are kept on the CHESS subregister and maintained by the sponsoring broker. Registries are not permitted to enter selling transactions against these holdings.
Sponsoring Issuer Number (SIN)
Sponsoring Issuer Number was a unique identification number issued to each Issuer, which offers Issuer sponsorship. It is no longer used and has been replaced by CHESS allocated User Identifier Code (UIC).
SRN (Shareholder Reference Number)
12 characters usually starting with ‘I’ or ‘C’ followed by an 11 digit number. A SRN is a product of an issuer sponsored holding and will be needed to be quoted in all dealings with the registry.
Important note - your SRN identifies you as the owner of your securities and should be stored securely.
Stamp Duty
A State Government charge that is levied on certain securities and property transactions.
Standard and Poors (S&P)
A global organisation that provides services including independent analysis and information on stocks, bonds, mutual funds and many other complex investment vehicles, investment data, rating services, indices, benchmark services, valuation analysis and opinions.
The S&P/ASX indices measure the movement in share values resulting from trading on the ASX which are constructed and calculated by Standard and Poors.
Refer to ASX website for Standard and Poors indices information. Stapled Securities Two legally different instruments which under their terms of issue are coupled together for certain purposes. In particular, they cannot be transferred separately either on-market or off-market. Examples of such securities include ordinary shares and units in an associated unit trust; ordinary shares and unsecured notes; ordinary shares and options. A 'parcel' consisting of one share and one unit or note or option is traded on the stock exchange as though it were a single security.
Start of Day
The time when the full range of overnight CHESS reporting is available to the CHESS users.
Statements
A written summary of events during a period that is given to an Investor.
Investors receive a holding statement, which outlines the number of shares that they have.
There are several other types of statements:
- Opening statement – This statement confirms the number of shares that the holding has acquired. When an Investor first becomes registered as the holder of shares in the company they are usually issued a holding statement within five business days.
- Ad hoc statement – This statement can be requested at any time by an Investor to replace a statement that has been lost, destroyed or stolen. It will only show the SRN and the holding balance as at the date of issue.
- End of month statement – these statements are automatically issued at the end of the month to Investors that have had a movement either up or down in their holding during that particular month. They show the opening balance for the month, the transactions that have taken place during the month, and the closing balance. They are required to be issued within five business days of the end of the month.
Statutory Declaration
A legally binding signed declaration made by a person to say that the statement they are making is true and correct. It is normally witnessed by a Justice of the Peace (JP).
Stock
The term stock, or stocks and shares have now become synonymous with securities.
Stock Exchange
A general term used to refer to the organised trading of securities through various exchanges and through the over-the-counter market. A "stock exchange" is a specific form of a stock market, a physical location where stocks and bonds are bought and sold, such as the ASX, New York Stock Exchange, NASDAQ or NSX.
Stop Payment
A notification to a bank that a cheque has been lost or stolen and is not to be honoured.
Sub Position
Same as reserved. Once an acceptance has been received for a block of shares then those shares are flagged to be unavailable for trading.
Sub Register
A component of the principal register whereby securities held in different modes are segregated. There are several sub registers namely CHESS, Issuer Sponsored, Certificated, FAST, and CREST.
Subscribers
One who agrees to purchase securities.
Substantial Shareholder
A person / company which owns over five percent of a company's issued capital (and as a result, voting rights). Substantial Shareholders must advise the ASX of any purchase or sale that changes their holding.
Substantial Shareholder Notice (SSN)
A form of notification which must be completed by an Investor once he/she exceeds a certain proportion of the shareholdings in a company.
Synthetic Instrument
Also known as a derivative.
T
back to top ▲T + 3
A stock exchange rule requiring both broker/broker and broker/client settlements for most stock exchange transactions to take place on the third business day after the date of the transaction.
There are penalties for both brokers and clients who miss the deadlines. This rule enables the bulk "netting" of transactions between brokers each day, thus reducing the paperwork which previously applied when individual buying and selling orders needed to be matched.
Takeover
Takeovers are when one company (Offeror) makes a bid for another company (Target) through the purchase of its shares.
A Takeover can be for all or part of a company. They can offer Investors a choice of cash or securities or a combination of both. Prior to the takeover reaching the unconditional stage, the offeror can either change the offer or abandon the takeover. The term takeover is normally used to imply that the acquisition is made on the initiative of the acquirer and often without the full agreement of the acquired company, as distinct from a merger.
Takeover bids may be of two sorts; an off market, or an on market bid.
- Off market bids involve the Investors receiving information from the directors of the company making the takeover bid that set out the details of the bid, as well as the recommendations from the directors of the company that they are attempting to acquire.
- On market bids involve the Offeror acquiring the services of a broking firm to buy all Target company shares offered in the market at a specified price for a period of at least one month.
Both on market and off market bids can take place simultaneously.
Takeovers can move through four phases, entitlement, acceptance, unconditional and compulsory. Reaching the compulsory stage will be dependent upon conditions set by the offeror.
Tax Deferred Income
The tax deferred portion of income relates to depreciation allowance for plant and equipment. It does not need to be included in a unitholder's assessable income but needs to be brought to account when calculating a possible capital gains tax liability on sale of units (Income Tax Assessment Act - Sections 54 and 1602m).
Tax File Number (TFN)
A unique number issued by the Australian Taxation Office (ATO) to individuals and organisations to increase the efficiency in administering tax and other Commonwealth Government systems such as Income Support payments.
Tax File Number Exemption
There are a number of categories of Investor who are exempt from quoting a TFN in relation to their investments.
These categories include:
- entities not required to lodge tax returns
- pensioners
- non-residents
To claim an exemption, as an organisation not required to lodge tax returns or as a pensioner, the exemption status should be advised on a Tax File Number Quotation\Exemption form.
Tenancy in Common
The ownership of an asset by two or more persons collectively. On the death of one, the ownership of a designated proportion of the property (not necessarily an equal share) passes to that person’s heirs, as distinct from joint tenancy. A tenant in common is one of the co-owners and not a ‘tenant’ in the sense of ‘lessee’.
Theoretical Value
The theoretical value which a Corporate Action (such as a rights issue or a bonus issue) would have on the market, if the market were perfect and if there were no other changes in market conditions apart from a corporate action.
Third Party Payment Instruction
A service whereby a Investor's dividend cheque is forwarded to an address other than that of the Investors, i.e. Third party.
Tolerance Amount
The tolerance amount is a range of amounts that is under or over the correct issue price for a corporate action that an Investor has mistakenly paid where they will not be refunded the money. The Issuer defines the tolerance amount.
If an Investor has overpaid, and the amount falls within the tolerance amount, the Issuer may keep the money (to absorb the cost of Investors who have underpaid) or give the money to charity. If an Investor has underpaid, and the amount falls within the tolerance amount, the Issuer will allot the number of securities that the Investor has requested (using money from Investors who have overpaid to make up the shortfall).
If the amount paid does not fall within the tolerance amount, when the Investor has overpaid, the Issuer will refund the money or request the shortfall of the money, or if they have underpaid, the Issuer will scale back the allotted shares closest to the amount that the Investor has paid.
Top Up
A Top Up is when an Issuer offers Investors the opportunity to buy more securities in order to make their holding a marketable amount of shares (a marketable parcel is generally $500.00 worth of securities). For example, a holding with $450.00 worth of securities will be offered the value of $50.00 more, to ‘Top Up’ their holding.
Top Ups are usually associated with payment of Dividend Reinvestment Plan securities at the time of a dividend, or Buy Backs. For example, some companies supplement their dividend reinvestment plan with optional share purchase ("top up") plans allowing the acquisition of further shares up to some limit free of brokerage and stamp duty.
Trade
Securities transaction between two parties. A Trade may be one of:
- Broker/Broker trade where both parties are ASX member Brokers
- Broker/Non-Broker trade where one party is an ASX member Broker and the other is not
- On-Broker/Non-Broker trade where neither party is an ASX member Broker
Trade Instruction Cut-off Time
The time by which value transactions for the current settlement cycle must be transmitted to CHESS. This time may be governed by market convention.
Trade Notification
Advice to the Clearing House from a Participant of a trade to which it is a settlement counterparty.
Tradeable balance
Securities that can be bought or sold on the stock market
Trading Class
A security which can be traded (bought or sold) in the market.
Trading Halt
A temporary suspension in the trading of a particular security on one or more exchanges, usually in anticipation of a news announcement or to correct an order imbalance. A trading halt may also be imposed for purely regulatory reasons. During a trading halt, open orders may be cancelled and options may be exercised.
Trading Investments
Investment holdings in other entities held for trading or as longer term investments in the other companies. The value of trading or current investments are calculated at "net market value" (that is, the amount which could be expected to be received from the disposal of an asset in an orderly market after deducting costs expected to be incurred in realising the proceeds of the disposal). The value of long term investments is calculated at cost or valuation. In any event, the valuation must not exceed the recoverable amount.
Tranche
An additional block of stock, supplementary to an existing issue.
Transaction
A record of movement (selling or buying) in an Investor’s holding.
Auditing is usually done by comparing the transaction to the source document. There is no previous copy of a transaction. Examples include off market transfers and conversions, allotments, dividend payments, acceptances, removals, CHESS transfers and conversions.
Transfer
A legal document used to transfer the holding of one Investor to another. It is no longer required for on market transactions.
Transformation
The process by which one security turns into another. This usually happens in cases where an Issuer changes its name or when securities change their nature (e.g. becomes fully ranking instead of partially ranking).
Transmission
The transfer of shares from a deceased Investor to the beneficiary/beneficiaries in accordance with estate documentation.
Trust Account
An account separate and physically segregated from an advisor, broker or other professional’s own funds, in which clients funds are deposited in accordance with the law.
Trust Distribution Payments
A payment of a trust’s profit to unit holders. Under most trust deeds, trusts are not permitted to retain profits.
Trust Instrument
A deed (legal document) "signed, sealed and delivered" which sets up a trust and defines its terms; the rules by which a trust may operate.
Trustee
A person or company that has legal responsibility for financial aspects (receipts, disbursement, and investment) of funds.
A trust company which acts in a capacity of trust as a fiduciary and to whom assets have been conveyed for the benefit of another party. The Trustee in this case oversees the behaviour of the manager in relation to the operation of a unit trust.
Trustee Security
A trustee security is an investment in which a trustee can legally invest unless the relevant trust instrument specifically prevents it.
U
back to top ▲Uncalled Capital
That part of the company’s issued capital which has not been paid for by the Investors.
Uncertificated Holding A shareholding where no certificates are issued e.g. CHESS or Issuer Sponsored holding. Uncertificated holdings make up the majority of the shareholdings. Legislation required ASX listed Australian companies to convert share certificates to Issuer Sponsored holdings by the end of 1998. Companies that are listed in Australia but incorporated overseas continue to use share certificates.
Unclaimed Money
Monies which cannot be paid by the Issuer to their rightful owners and which need to be paid over to the government. The usual cause of the problem is the failure of the owner to advise the relevant organisation of a current address.
The Issuer will remove the relevant Investor's details after seven years and forward to the appropriate office of state revenue.
The rightful owners can reclaim the amounts concerned. Typically the assets affected include inactive bank accounts; matured fixed deposits, debentures, notes or life insurance policies; dividend or interest payments; repayments of share capital; liquidators’ distributions; the cash consideration in compulsory acquisitions under takeovers.
Unconditional Level
During a takeover bid, Investors in the target company must choose to either:
- accept the takeover offer;
- reject the offer; or
- to sell their shares in the target company.
If a predetermined percentage of Investors accept the offer, then the takeover will proceed as the offeror will have a controlling interest in the target company. The unconditional level is this predetermined percentage (%) of acceptances required for the takeover bid to proceed.
If the takeover has reached the unconditional level, the remaining Investors (who have not responded to the offer) no longer have any choice over whether they will accept or reject the takeover offer. The takeover has now become unconditional. They can still keep the shares of the target company (unless compulsory acquisition occurs), or sell them on the market. The Offeror must fulfil their obligation to settle the takeover offer with all Investors who have accepted the bid by paying them cash, shares, or a combination of both.
Unconditional Phase
The unconditional phase occurs when the takeover has reached the unconditional level.
Underlying Instrument / Security
The shares subject to purchase on the exercise of an option.
Underwriter
An organisation that, for a fee, guarantees to the Issuer a minimum level of subscriptions to a share or debt issue. f public subscriptions fail to reach this minimum level then the underwriter takes up the shortfall and ensures that the funds will be available at a specific time. Underwriters often have sub-underwriters who share the risk.
Underwriting
A bank or other financial institution's guarantee to a company that it will buy a certain number of shares in a company's new issue or rights issue, should the issue not be fully subscribed by other investors.
From the company's point of view, having its new issue underwritten is a form of insurance. It means that if it has priced an issue too high and the market shuns it, the company can still be sure that it will get money from the new issue.
Of course, security comes at a price. Underwriters charge a fee for the back-up they provide. If the new issue is very popular, it will pocket that fee and make a handsome profit. Occasionally, they get badly burned. New issues underwritten immediately before the 1987 stock market crash lost a lot of money.
Sometimes companies do a rights issue at a deep discount to reduce the underwriting fees.
Unfranked Dividend Dividends without attaching franking credits under the dividend imputation system. These Investors will be required to pay tax on the full amount of the dividend that they receive.
Unfranked Dividend
A dividend paid to a shareholder that has not been subjected to tax.
Unissued scrip
A shareholding which is not Issuer Sponsored or CHESS but for which no certificate has been issued.
Unit Trust
An organisation which invests funds subscribed by Investors in securities, and in return issues units which it will repurchase. These units, which represent equal shares in the trust’s investment portfolio, produce income and fluctuate in value according to the assets the unit holds. The trustees which hold the securities are usually banks or insurance companies and are distinct from the management company.
The subscriber to a unit trust does not receive any of the profits of the company managing the trust.
The trust managers derive income from a regular service charge. Unit trusts are directed particularly at the Investor with small sums at his/her disposal. Units are easily purchased and resold, and risks are widely spread. The Investor benefits from expert management. Trusts may specialise in different areas such as blue chip securities, small companies, or foreign companies.
Unlisted Company
A Company and/or shares that are not available for purchase or sale through the sharemarket.
Unmarketable Parcel
Historically, a number of shares less than a marketable parcel was said to constitute an odd lot or an unmarketable parcel. These parcels were not able to be bought or sold easily.
The concept of a marketable parcel has now been abolished, so a marketable parcel now consists of a single share. The terms marketable parcel, or unmarketable parcel, are still widely used for ease of trading shares. Any parcel of shares with a market value of below $500 is considered an unmarketable parcel.
Unsecured Notes
A loan made by the note holder to an Issuer for a fixed period of time at a fixed rate of interest. The loan is not secured by the Issuer against any of its assets. The notes offer a higher rate of return than a debenture of the same maturity but they do not carry the security of the debenture.
User Identification Code (UIC)
A User Identifier Code (UIC) is a unique, 5 number code allocated by the Securities Clearing House (SCH) to all Issuers of CHESS approved securities for the purpose of identifying the source and destination of messages. The UIC may be:
- the existing SEATS (Stock Exchange Automated Trading System) Broker number of a Broker;
- the existing IPN (Institutional Participant Number) of an institutional participating Investor under FAST (Flexible Accelerated Security Transfer system); or
- a PID (Participant Identifier).
Unlisted Managed Fund Investor Number
Unique identifier assigned to each investor who holds units in a managed fund.
Unlisted Managed Fund Portfolio Number
Unique identification number assigned to investment portfolio within a Managed Fund.
Unlisted Managed Fund Username
Unique identifier assigned to each Unlisted Managed Fund Unit Holder provided by email or post. It can begin with IN, CP or F followed by numbers; OR is a 6 - 11 digit numeric value.
V
back to top ▲Valuation Price
The valuation price available from the ASX's data service signal E is calculated as follows:
- Price Traded Stocks
If there was a trade on the previous day then the LAST price adjusted by either a higher BID price or a lower ASK price is used to create the valuation price. If there were no trades on the previous day then yesterday’s VALUATION price, adjusted by a higher BID price or a lower ASK price, becomes the new VALUATION price
- Yield Traded Stocks
The VALUATION YIELD is converted to a price using a formula that takes into account maturity date, interest rate, interest payment date, interest payments per year and basis of quotation.
The value of interest accrued since the last interest payment date is calculated and subtracted from the converted price giving the VALUATION PRICE.
Value
The value of your securities is your balance multiplied by the price at last close.
Vendor
Defined in the ASX Listing Rules as a person to whom restricted securities are issued.
Vendor Shares
Shares issued by an Issuer as consideration for the acquisition of an asset, usually at the time of a float. There are usually restrictions on trading these shares immediately after a public issue.
Voting Direction Form
Similar to a proxy form, however, holder can only nominate the Nominee as their proxy.
Voting Exclusion Statement
A statement referred to in ASX Listing Rule 14.11 where a director excludes themselves from voting if they have a conflict of interest or stand to benefit from a resolution. For example, a director would be excluded from voting on their re-election to the board of directors.
Voting Instruction Form
A voting instruction form is used when the holder directs a trustee/nominee on how to vote for their shares.
W
back to top ▲Warrant
A certificate that gives the Investor the option to purchase shares at a fixed price before a specified date or in some cases indefinitely (endowment warrants). Warrants are sometimes attached to other securities as an added purchase incentive and may be traded separately after issue.
Warrant Code
All warrants quoted on ASX have a six-letter code: The first three letters of the code identify the underlying security. For most equity warrants this is the same as the three-letter ASX code of the underlying company shares.
In some cases the first three characters may represent a basket of stocks. The fourth letter of the code identifies the type of warrant. The fifth letter identifies the warrant issuer. The sixth letter is a sequential code.
Warrant Issuer
The issuer of a warrant. As set out in the ASX Business Rules, a warrant issuer is an institution that issues the warrant and meets the eligibility criteria.
Warrant Series
Each warrant series has a separate warrant code. A warrant series is where warrants with the same terms of issue and underlying asset have the same warrant issuer, exercise price, expiry date (see expiry, expiry date, expiration) and settlement procedure.
Warrants
A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue as a "sweetener" to entice investors.
Weighted Average
When an Issuer is setting a price on a share, they will take the average share price for a pre-determined number of days.
Will
A document which sets out how an individual wants his or her wealth and property to be distributed after death.
Winding Up
The ceasing of a company’s business by a liquidator.
Withholding Tax (WHT)
Australia has double taxation agreements with many other countries. This usually results in income that is earned by the residents of one country from sources in a different country being taxed only once, but at the higher of the two possible rates.
Dividend and interest payments that are made by Australian companies to overseas Investors are subject to a special deduction known as 'Withholding Tax'. This eliminates the need for overseas Investors to lodge Australian tax returns. There are two types of withholding tax;
- Non resident withholding tax is deducted from interest, dividend and royalty payments made to non-resident Investors; and
- Resident withholding tax is deducted from certain investments or payments to residents where the recipient has not provided their Tax File Number.
Withholding tax is deducted at the source by the Share Registry from the payments.
X
back to top ▲Y
back to top ▲Yield
An investments returned earnings, generally expressed as a percentage. This takes into account its current market price and annual income.
Z
back to top ▲Zero Brokerage
Some companies allow their shareholders to acquire newly created shares free of brokerage and stamp duty.
General
Am I a CHESS Sponsored Holder or an Issuer Sponsored Holder?
If you have entered a sponsoring agreement with a broker (or another CHESS sponsor) then you are a CHESS Sponsored Holder - also referred to as a Broker Sponsored Holder. If not, then you are an Issuer Sponsored Holder.
CHESS Sponsored holdings are identified by a Holder Identification Number (HIN) while Issuer Sponsored holdings can be identified by a Securityholder Reference Number (SRN).
What do brokers do?
Brokers provide a variety of services to their clients. Primarily, they facilitate securities trading - that is, the buying and selling of shares. If you want to buy or sell shares you need to do so via a broker.
To find a broker, visit the Australian Stock Exchange website, or check the Yellow Pages under 'Stock and Share Brokers'.
How secure is the information I provide to you? Who else can view what?
MUFG Corporate Markets understands that privacy is important to you. MUFG Corporate Markets is subject to the requirements of the Privacy Amendment (Private Sector) Act 2000 (Privacy Act), which governs, among other things, how private sector organisations handle personal information. Our Privacy Policy is available for you to read in this help section.
My documentation has been stolen - what do I do?
If you think that one of your holding statement or payment advices has been stolen, you should notify us straight away. We will assist you with an urgent replacement of your SRN. If you have a broker sponsored holding notify your broker.
How do I get information about the company in which I invest?
For information about the company in which you invest you can;
- Register for email updates - announcements, annual reports, newsletters, etc via the Investor Centre;
- Visit the Australian Stock Exchange website; and
- Visit the website of the company.
How can I obtain company annual/financial reports?
Investors can elect how they receive annual and other financial reports through the Investor Centre. Past reports are available on the issuer website.
Can minors have shareholdings?
Some issuers may specifically preclude shareholdings from registration in a minor's name.
Where not specifically precluded, minors are able to hold shares in their name, however this may present several impracticalities and legal constraints. The following problems could occur;
- The contract to purchase the securities may not be valid.
- Tax File Number Legislation requires that a TFN or valid exemption is quoted, or
- resident withholding tax is deducted from any unfranked payment. Children under 16 years of age earning income from dividends are not able to claim their date of birth as an exemption. The income threshold does not apply to dividend income.
- They may not be legally entitled to sell shares or sign any transfer out of their name.
- They are not legally allowed to appoint a proxy or vote at meetings.
- They may not be allowed to issue instructions regarding change of address, banking requests and dividend elections.
To overcome these difficulties securities to be held for a minor should be registered in the name of a parent or guardian, with a designation such as for identification purposes.
To transfer the shares into the name of the parent of guardian, please complete a Minor Statement and Indemnity Form and a Transfer of Ownership Form. The forms should be submitted with a certified copy of the minor's full birth certificate or documentation that appoints you as the guardian.
Please note that above is a summary only and you should seek your own independent advice if you are considering registering shareholdings in the name of a minor.
I've just received an envelope in the mail marked DO NOT FORWARD, addressed to the previous occupants. What do I do with it?
Please return it to:
MUFG Corporate Markets (AU) Limited
Locked Bag A14
SYDNEY SOUTH NSW 1232
How do I put a stop trade on a holding?
CHESS Sponsored holders should contact their broker.
For Issuer Sponsored holdings, MUFG Corporate Markets can only place a stop trade on a holding if specifically instructed under legal authority (e.g. under court order), or if the shares have been moved to another SRN because the existing one has been lost or stolen.
What is a 'certified copy'?
A certified copy is a copy of an original document that has been certified as a true and correct copy by a person who is authorised to witness a statutory declaration. Persons who are authorised to witness statutory declarations (under the Commonwealth Statutory Declarations Act 1959) include:
- Accountant (Chartered or Certified)
- Clerk of a Court
- Commissioner for Affidavits
- Commissioner for Declarations
- Dentist
- Justice of the Peace
- Legal Practitioner
- Magistrate
- Medical Practitioners
- Nurse
- Pharmacists
- Police Officer
- Post Office Manager
- Sheriff or Sheriff's Officer
- Teacher
- Veterinary Surgeon
For information on other persons who are authorised to witness a statutory declaration, please contact us.
Do I need to complete an AML/CTF Investor Identification Information Form?
Under the Anti-Money Laundering and Counter Terrorism Financing Act 2006, security issuers and other market participants (such as MUFG Corporate Markets, a broker or financial planner) must take steps to identify investors before providing them with one of the following designated services:
- A request by the buyer of securities in a stapled structure, trust or managed fund to register an Off-market Transfer Form;
- An application to acquire securities in a stapled structure, trust or managed fund (check the PDS document for instructions); and
- A request to MUFG Corporate Markets (AU) Limited to sell your securities.
If you are requesting one of the above services, then you may need to complete an AML/CTF Investor Identification Information Form and sent it to us with your completed transfer form, sale authority form or application form and, certified identity documents. Please contact MUFG Corporate Markets on 1300 554 474 for more information. Do this before submitting the transfer, application or sale authority form to MUFG Corporate Markets for processing!
What is a Corporate Representative and how do we fill out of Letter of Representation form?
Pursuant to Section 250D and 253B of the Corporations Act 2001, a company may appoint an individual as a representative to exercise all or any of its powers at meetings of a company's members. The appointment may be a standing one. The appointment must set out what the representative is appointed to do and may set out restrictions on the representative's powers. A Company may appoint more than one representative but only one representative may exercise the body's powers at any one time.
Letter of representation forms must be signed in accordance with the Company's constitution. Typically, by two signatories (i.e. two directors or a director and company secretary) OR by the sole director/sole company secretary. If a company representative turns up to a Meeting and has either not lodged the Letter of Representation form by the lodgement date, (if any), does not have a completed Letter of Representation form with them or is not able to complete and correctly sign one whilst in attendance, they can attend the Meeting as a visitor.
Copies of the form can be found on the forms section of our website or picked up at the Meeting. A Company may also write their own Letter of Representation, which will be accepted providing it is signed correctly.
Selling and Transferring Securities
How do I sell my shares?
Issuer sponsored shareholders can use the Share Sale Centre. You need to sell your entire shareholding. Under the Anti-Money Laundering and Counter Terrorism Financing Act 2006, MUFG Corporate Markets must take steps to identify investors before selling securities for them. Therefore, you may need to complete an AML/CTF Investor Identification Information Form and send it to us with your completed sale authority form and certified identity documents. For more information on terms, conditions and eligible issuers please see the related pages on this website or contact MUFG Corporate Markets on 1300 554 474.
MUFG Corporate Markets receives hundreds of calls each week from shareholders wanting to know how they can sell their shares. Ordinarily, issuer sponsored shareholders must establish a relationship with a stockbroker in order to sell their shares. However the Share Sale Centre provides issuer sponsored shareholders with a simple, reliable and affordable alternative to traditional share sale services.
If you are CHESS sponsored you will need to contact your broker. You will need your SRN or HIN to sell your shares. A copy of the Share Sale Centre brochure may be downloaded here
How do I amalgamate my two holdings?
If both holdings are issuer sponsored and the names, addresses and banking instructions are identical, the duplicate holdings can be amalgamated. Simply write to us quoting your SRNs and requesting that we amalgamate the holdings. Please nominate the SRN you wish to retain.
The names, addresses and banking instructions of the two holdings must be identical before we can amalgamate your holdings. You can compare and amend most of these details online. Alternatively, call MUFG Corporate Markets on 1300 554 474.
If you are holding employee shares, the requirements may be different - please call MUFG Corporate Markets on 1300 554 474.
If one or both of your holdings is CHESS sponsored, you will need to contact your broker to arrange for the amalgamation.
Can I transfer my shares to someone else?
Yes. However, how you transfer your securities will depend upon your individual circumstances.
If you are CHESS Sponsored, you will need to contact your sponsoring broker who will arrange the transfer on your behalf. If you are Issuer Sponsored and wish to transfer your listed securities - i.e. securities listed on the Australian Stock Exchange - to another person you will need to complete an Off-market Transfer Form (Transfer of Ownership).
If you are Issuer Sponsored and wish to transfer your unlisted securities - i.e. securities not listed on the Australia Stock Exchange - to another person you will need to:
- complete an Off-market Transfer Form;
- have stamp duty assessed and paid on the transfer (in the state of incorporation); and
- lodge the stamped document with MUFG Corporate Markets (AU) Limited.
You will need your SRN or HIN to sell your shares. Transfers must be validly completed and signed and must meet the issuer's conditions of transfer.
Under the Anti-Money Laundering and Counter Terrorism Financing Act 2006, some security issuers must take steps to identify new investors. If the securities you want to transfer are issued by a stapled structure, a trust or a managed fund, then the buyer may need to complete an AML/CTF Investor Identification Information Form and send it to us with your completed transfer form and certified identity documents. Please contact MUFG Corporate Markets on 1300 554 474 to find out whether the buyer must complete this form. Do this before submitting the transfer to MUFG Corporate Markets for processing!
Updating your Details
I recently sent in some instruction forms. How can I tell if my holding has been updated?
Information such as address details, payment instructions and annual report elections can be confirmed online by logging into the Investor Centre. Changes made through posted forms may take up to ((5)) working days be processed. If your change request has not been affected after this period, please call MUFG Corporate Markets on 1300 554 474.
Why can I update some elements of my holdings online, but have to complete a form for others?
MUFG Corporate Markets takes the security of your holdings very seriously, therefore there are restrictions on the extent of changes that may be conducted online. Availability is based on several factors, including industry regulations, transaction type and shareholding value. If the update you require is not available online, please complete and sign the relevant form and forward it to us for processing of your instruction.
How do I record/change my Tax File Number?
Holder’s can record or change their tax file number by logging into the Investor Centre.
How do I change my address?
How you update your address details depends on your individual circumstances. If you have a CHESS sponsored holding (prefixed with an 'X') you must change your address through your broker. If you have an Issuer Sponsored Holding (prefixed with an 'I') then you can update your address details for Individual, Joint and Company holdings by logging in to your portfolio and selecting 'Address' under the 'Communications' section. This change can be applied to one or multiple holdings. For security reasons if a holding is valued at greater than $200,000 or relates to a deceased estate then you will not be able to update this online and you will need to download a 'Change of Address' Form from the 'Forms' section.
If you are using the 'Single Holding' login then you will only be able to update your address details if you have an 'Individual' holding valued less than $50,000.
How do I change my name?
How you change your name on your holding will depend upon your individual circumstances. If you are a CHESS sponsored investor, you must change your name via your broker. If you are an issuer sponsored investor, your can change your name by completing a Name Correction Request and Indemnity Form (Name Correction). Please note that we are unable to accept requests by facsimile, email or phone.
The completed form should be completed and signed correctly and accompanied by relevant supporting documentation. If you are signing under a power of attorney, a certified copy of the original power of attorney must be lodged with us for noting (if not already noted). Supporting documentation requirements differ, depending on the reason for the change of name;
- Change of name by marriage - We also require a certified copy of your marriage certificate;
- Change to maiden name - if you wish to revert to your maiden name, we require a certified copy of your marriage certificate;
- Change of name by Deed Poll - We require a certified copy of the deed poll;
- Change of Company Name - We require a certified copy of the Certificate of Registration of Change of Name.
How can I correct the spelling of my name on the register?
If you are a CHESS sponsored investor, please contact your broker who will make the correction.
If you are an issuer sponsored investor, in most cases this simply requires completion of a Name Correction Request and Indemnity Form (Name Correction). Where the error has occurred in our office, we will immediately make the correction without asking you for any further documentation.
Payments
Can you tell me if I have any unpresented dividend/distribution cheques?
Please call MUFG Corporate Markets on 1300 554 474 to request a cancellation and reissue of your payment (charges may apply). If the original cheques were bank cheques, we will require your request in writing. Future payments (and in some cases, the outstanding payment) may be banked directly into your Australian bank, building society or credit union account. Not only is payment by direct credit much more secure, it’s faster - payments are credited to your account as cleared funds, allowing you to access them on payment date.
You may update your payment instructions on this website.
I haven't received my dividend cheque. Can you send me a replacement cheque?
Please call MUFG Corporate Markets on 1300 554 474 to request a cancellation and reissue of your payment (charges may apply). If the original cheques were bank cheques, we will require your request in writing.
Future payments (and in some cases, the outstanding payment) may be banked directly into your Australian bank, building society or credit union account. Not only is payment by direct credit much more secure, it’s faster - payments are credited to your account as cleared funds, allowing you to access them on payment date.
You may update your payment instructions on this website.
What happens if the bank rejects my direct credit?
In some cases, if the bank rejects your direct credit payment, a cheque will automatically be generated when the funds are returned to MUFG Corporate Markets. It will be mailed to your current registered address shortly thereafter. You will also be asked to update your bank account details for future payments.
In other cases, you may be required to provide new direct credit details to which the rejected payment and all future payments can be credited.
What do I do if my dividend/distribution cheque has been stolen or lost?
If your cheque has been lost or stolen, please call MUFG Corporate Markets immediately on 1300 554 474 to request a cancellation and reissue of your payment (charges may apply). If the original cheques were bank cheques, we will require your request in writing.
Future payments (and in some cases, the outstanding payment) may be banked directly into your Australian bank, building society or credit union account. Not only is payment by direct credit much more secure, its faster - payments are credited to your account as cleared funds, allowing you to access them on payment date.
You may update your payment instructions on this website.
Can I have dividends/distributions credited to someone else's bank account?
Some issuers allow dividends/distributions to be paid into third-party accounts - that is, accounts with names that don't match that of the register holder. In all cases, the dividends/distributions of joint holdings can be credited into the account of any one of the joint holders.
For information regarding a particular issuer's payment policies, please call MUFG Corporate Markets on 1300 554 474.
In which tax year do I report my dividends?
Dividends must be declared in the same tax year in which they are paid. The Australian tax year commences 1 July each year and ends 30 June.
You will find all the payment information required to complete your annual tax return (e.g. franked amount, imputed tax credits, net payment, etc.,) on your payment advices.
If you have invested in a trust and have received distributions, your annual tax statement provides all the information required to complete your annual tax return.
If you are unable to locate your advices and/or tax statements, login to the Investor Centre and download them from the Payment & Tax section. If you cannot find them online please call MUFG Corporate Markets on 1300 554 474 to order replacement copies (charges apply).
Please note that taxation will vary depending on your own personal circumstances. You should seek advice from your personal financial adviser or accountant. Tax laws may change over time and the summary above is a broad overview only. It is for information purposes only.
What dividends have I been paid?
Your dividend history and advices are available online and details the net amount paid to you.
What happens to dividends I haven't received? (Unpresented cheques and unclaimed monies procedures)
You can obtain details of unpresented cheques for your shareholding by calling MUFG Corporate Markets on 1300 554 474.
For recent payments, shareholders can request cancellation and reissue of payment (charges may apply). If the original cheques were bank cheques, we will require your request in writing.
Payments made more than two years ago may be advertised in the Government Gazette and if not claimed, will be forwarded to Unclaimed Moneys. To obtain details of payments forwarded to Unclaimed Moneys, please call MUFG Corporate Markets on 1300 554 474. We will also provide you with the appropriate Unclaimed Moneys contact number.
Future payments (and in some cases, the outstanding payment) may be banked directly into your Australian bank, building society or credit union account. Not only is payment by direct credit much more secure, it's faster - payments are credited to your account as cleared funds, allowing you to access them on payment date.
What are the terms and conditions of the Dividend Reinvestment Plan?
Copies of the Dividend Reinvestment Plan (DRP) Rules are frequently available on the issuer's website.
Please refer to the links in our clients list on the Registers We Manage page.
Alternatively, please call MUFG Corporate Markets on 1300 554 474.
Does my issuer have a Dividend Reinvestment Plan?
To find out if the company in which you invest offers a Dividend Reinvestment Plan (DRP) login to the Investor Centre, if any of your holdings has a current DRP it will appear under Payment & Tax --> Reinvestment Plans.
How do I change my banking instructions for dividends/distribution payments?
You can update banking instructions for Individual, Joint and Company holdings by logging in to your portfolio and selecting 'Payment Instruction' from the 'Payment & Tax' section. This change can be applied to one or multiple holdings. For security reasons if a holding is valued at greater than $200,000 or relates to a deceased estate then you will not be able to update this online and you will need to download a 'Request for Direct Credit of Payments' Form from the 'Forms' section.
If you are using the 'Single Holding' login then you will only be able to update these details if you have an 'Individual' holding valued less than $50,000.
What are my shares currently worth?
To find out the value of your shares you multiply the number of securities (balance) by the current market price. You can view the value of your holding as of the last close by logging on to the Investor Centre.
Where do I find information regarding tax implications?
For information regarding the tax implications of share ownership, please consult your tax adviser or accountant. Alternatively, visit the Australian Tax Office website.
Deceased Estate
What is required if a holder dies?
When a holder dies, their assets form part of their estate. The administration of an estate can be complex, time consuming and sometimes distressing. At MUFG Corporate Markets we have created a range of services for assistance when dealing with an estate.
Our Guide to Dealing with the Security Holding of a Deceased Investor is a helpful tool for first-time administrators.
How do I administer a deceased estate?
The administration of an estate can be complex, time consuming and sometimes distressing.
At MUFG Corporate Markets we have created a range of services for assistance when dealing with an estate. Our Guide to Dealing with the Security Holding of a Deceased Investor is a helpful tool for first-time administrators.
Employee Share Plan
What are the terms and conditions of my employee share plan?
For information regarding the terms and conditions of your employee share plan, please contact your share plan administrator at your place of employment.
If MUFG Corporate Markets administers your company's employee share plan please contact the administrator of the plan for further details. Contact details maybe found here.
I've resigned and am in the employee share plan. What happens now?
For information regarding the terms and conditions of your employee share plan, please contact your share plan administrator at your place of employment.
If MUFG Corporate Markets administers your company's employee share plan please contact the administrator of the plan for further details.