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GLOSSARY OF
TERMS
 A
proud
member of the Institute of Business Leaders.
www.businessleaders.com.au
Annual General
Meeting (AGM):
A meeting of shareholders that must be held every calendar year
to enable them to view the records of the company, elect
directors, and vote on matters integral to the running of the
company.
Assets:
Everything that a person or company owns or has due to it. Cash,
investments, money due, stocks and materials are "current
assets"; buildings and machinery are "fixed assets"; patents and
goodwill are "intangible assets". Assets surplus to liabilities
are "net assets".
Asset backing:
Useful check for investors; net assets of a company (in $) are
divided by the number of issued shares. Relate this to the firms
earning capacity.
Associated Company:
A company that is owned between 20% and
50% by another company.
Authorised capital:
This used to be the total amount of capital that could be
offered to the public for subscription and was the amount named
in the Memorandum of Association. It was usually fixed at some
round figure sufficient for the company's foreseeable needs.
(see Subscribed or Issued Capital) Note: As of July 1, 1998 no
longer allowed. Merely common stock or issued shares.
Board of Directors:
Persons elected by shareholders to control
the planning and implementation of corporate objectives.
Bonus Issues:
Distribution of funds to shareholders in the form of shares
issued free.
Business Angels:
Informal private investors making direct equity investments in
high growth potential SME’s (and frequently contributing
management and other expertise) in return for a share of the
company, its income or capital growth.
Call:
Often Limited Liability companies have shares that are not fully
paid. A call can be made for the payment of part or all of this
outstanding capital. Holders of shares in Limited Liability
companies cannot avoid a call and are Liable for monies so
called. (see Limited Liability)
Capital:
Money invested in a business by its owners in order to earn
income.
Capitalised Value:
Is the total amount of money invested in a company in return for
shares (the equity held in the company), or its revised value
calculated by the most recent share sale price times the number
of issued shares.
Company:
A company is a corporation. A corporation
has been defined as a succession or collection of persons having
in the estimation of the law an existence, as well as rights and
duties, distinct from those of the individual persons who from
time to time comprise it. The company continues in existence
irrespective of the death or bankruptcy of a member.
Company limited by
shares:
Is a company in which the liability of the
members is limited to the amount of capital they have subscribed
or agreed to subscribe. (See Public Company)
Debentures:
A debenture is a fixed interest loan
secured by specific fixed assets or through a "floating charge"
on the business as a whole. Such loan stock is often issued with
a convertible option attached to it; at the end of a stated
period, the lender may convert it into ordinary shares.
De-listed:
Removed shares or securities that were once quoted on a stock
market.
Development Capital:
Larger volumes of equity finance provided
by a professionally managed fund to established firms with a
track record of successful enterprise.
Discount:
The amount by which a security is quoted below its issue value.
The opposite to "premiums".
Dividend:
Distribution of profits among shareholders usually expressed as
a percentage of paid up capital or as an amount per share.
Dividend yield per share (DPS):
The dividend yield is the theoretical
return on investment from dividends per share, based upon the
price paid per share. It is shown as a percentage of the last
sale price.
EBIT:
Earnings before
Interest and Tax.
EBITDA:
Earnings before
Interest,
Tax, Depreciation and
Amortisation..
Equity:
The capital invested in a company by its owners, together with
retained profits from previous years that have not been
distributed as dividends.
Equity Funding:
Through the issuing of new shares. The opposite to debt funding.
Equity finance is contributed in return for a share of
ownership. It is not repayable, demands no provision of security
(other than issued shares) and bears no interest.
Exempt Proprietary
(Pty Ltd) Company:
In filing an annual return, it is not
necessary to include a copy of the balance sheet of the company,
if it is an 'exempt' proprietary company, that is to say one in
which no share is owned or deemed to be owned by a public
company. This privilege enables an exempt proprietary company to
keep its affairs confidential.
Float:
The initial raising of capital by public
subscription and subsequent listing of the issued shares on a
stock exchange.
Gross
Revenue:
All receipts from the
sale of a products and/or services.
Growth SME:
A small or medium sized enterprise either
aspiring to, or achieving high or significant growth.
Initial public
offering (IPO):
A new share issue
(allotment) from a company (the Issuer). The floating of
a company by offering a proportion of its shares to public
investors. Sometimes called the ‘Primary issue’. Before
reforms in the Corporations Law (CLERP)
in 1997,
the primary method for a small to medium sized enterprise to
obtain capital from the public was through an Initial Public
Offering (IPO).
The basic concept of an underwritten IPO
is that part of a corporation is sold to an underwriter, who
then resells it in much smaller pieces. An underwritten IPO is
traditionally handled by securities firms (stockbrokers) that
have formed an "underwriting syndicate," with one of the firms
acting as "lead" or "managing" underwriter. The company's
primary responsibility is to contact and negotiate with the
managing underwriter, who will then direct the sales of the
securities. The most important ingredient of an IPO is that the
underwriter has responsibility for selling the securities.
Investment ready:
The state of a firm being considered to meet the requirements of
external equity investors. These requirements include a high
quality management team, and appropriate governance and
delegation arrangements.
Joint Venture:
An agreement for two or more parties to jointly explore, finance
or direct a particular development. May be in various forms such
as, 50/50, 75/25, with a right to increase to 60/40 etc.
Limited Liability:
The liability of shareholders is limited to the fully paid value
of the shares held. If partly paid shares are held in a limited
company and a call is made, the holder is liable to pay the
call. A person taking up shares in a company knows from the
beginning the extent of his individual liability.
Net
Tangible Assets Per Share (NTA):
Is the asset backing per share. Calculated as follows:
Offer Information
Statement (OIS):
Is a short form of prospectus that is only
slightly less onerous than a full prospectus.
Option:
The right to take up certain shares on
specified terms within or at a specified time. One may negotiate
to convert part or all of an account owing, into an Option to
take up shares in a company by conversion of any, or all, of the
account total. Options are frequently transferable and are
themselves bought and sold.
Paid up capital:
This is the amount of money that has been
paid or deemed to have been paid on shares actually allotted.
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