The Australian Stock Exchange Essay Research Paper — страница 4

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the top 150 companies, ranked by market capitalization. 3) Narrow your selection down to thirty companies with the lowest price/earning ratios. 4) Buy shares with high dividends, preferably fully franked ( that is, potentially tax free). 5) Seek out companies with an increasing earnings pre share. 6) Select a verity of industries. It’s the total portfolio that should perform, not just securities. 7) Select companies with a proven track record of sound management. So although it is the alternative approach, it can still rely on ‘fundamentals’. Part 4 Rules and Regulations of the ASX The principles on which the listing rules are based embrace the interests of listed entities, maintenance of investor protection and the need to protect the reputation of the market. The

principles are as follows: -Minimum standard of quality, size, operations and disclosure must be satisfied. -Sufficient investor interest must be demonstrated to warrant an entity’s participation in the market by having it’s securities quoted. -Securities must be issued in circumstances which are fair to new and existing security holders. -Timely disclosure must be made of information which may affect security values or influence investment decisions, and information in which security holders, investors and ASX have a legitimate interest. -Information must be produced according to it’s highest standards and, where appropriate, enable ready comparison with similar information. -The highest standards of integrity, accountability and responsibility of entries and their offers

must be maintained. -Practices must be adopted and pursued which protect he interests of security holders, including ownership interests and the right to vote. -Security holders must be consulted on matters of significance. -Market transactions must be commercially certain. ASX has an absolute discretion concerning the admission of an entity to the official list (and it’s removal) and quotation of it’s securities (and their suspension). ASX also has discretion whether to require compliance with the listing rules in a particular case ( i.e., apart from waiving the rules). In exercising it’s discretion, ASX takes into account the principals on which the listing rules are based. ASX may waive compliance with a listing rule, or part of a rule, unless the rule in question says

otherwise. The listing rules necessarily cast a wide net. However, ASX does not want to inhibit legitimate commercial transactions that do not undermine the principles on which the listing rules are based. If ASX decides to grant a waiver, it may do so on conditions. The conditions must be complied with for the waiver to be effective. Waivers are published by ASX periodically and are also advised to the ASC. The listing rules themselves are to be interpreted: -In accordance with their spirit, intention and purpose; -by looking beyond form to substance; and -in a way that the best promotes the principles on which they are based. Once again if any entity does not comply with the listing rules, it’s securities may be suspended from quotation or it may be removed from the official

list. An entity seeking listing must be admitted to the official list of the ASX and then, for trading in its securities must be granted an official quotation. There are prerequistis for both admission to the official list and official quotation. When applying for admission to the official list an entity must provide the prescribed documentation to the ASX, demonstrate compliance with the listing rules and pay a listing fee. As you can see the ASX has strict control and regulation of its members. Many types of problems can occur within the stock exchange, for example an entity could list on the ASX without meeting a requirement for general admission which must be met to the ASX’s satisfaction. One particular requirement for general admission is No.8. The entity must satisfy

either the profit test or the applicable net tangible assets test. THE PROFIT TEST To meet the profit test, the listing rules require that an entity must satisfy each of the following. 1) The entity must be a going concern, or the successor of a going concern. 2) The entity’s main business activity at the date it is admitted must be the same as it was during the last 3 full financial years. 3) An entity must provide to ASX financial statements for the last 3 full financial years which are prepared to Australian Accounting Standards. Financial statements for foreign entities may be prepared and audited to other standards acceptable to ASX. The financial statements must be qualified in a way that goes to whether the entity can continue as a going concern or has satisfied the