AFS licence

An Australian Financial Services (AFS) Licence (or AFSL) is required for any Australian business which provides financial services. It is issued by ASIC, as required under s913B of the Corporations Act.


Australian Securities and Investments Commission. Responsible for enforcing and regulating company and financial services laws to protect Australian consumers, investors and creditors.


Australian Securities Exchange Ltd, or ASX Limited, is an Australian public company that operates Australia's primary securities exchange, the Australian Securities Exchange.

Bear market

When prices are falling and further falls are expected.


A list of all indications of interest for a new issue offering, put together by a lead underwriter.

Bull market

When prices are generally rising and more rises are expected.

Capital structure

How a firm finances its overall operations and growth by using different sources of funds. This can be a mixture of long-term debt, short-term debt, common equity and preferred equity.

Cash in bank

The sum of all liquid funds a company currently has on their books.

Corporate adviser

An adviser engaged by a company to offer strategic corporate finance and advisory services in relation to listing, mergers, acquisitions, capital raising and other significant corporate transactions. Often works as an arm of a larger brokerage house.

Day trading

A form of share dealing wherein shares are bought and sold online over a period of single day's trading, with the intention of profiting from small price fluctuations.

Dual listed

A public company which is listed on two stock exchanges yet operates as a single business through a legal agreement. A company will often dual list for the purpose of adding further liquidity to the shares, therefore allowing investors more choice as to where they can trade their shares.


The number of a company’s shares which are available for trading.

Go public

The process by which a privately owned company first issues shares of stock to the general public. This is done via an initial public offering (IPO).

High net worth individual/High net worth investor

A classification used by the financial services industry to denote a person of high net worth. The term is often used interchangeably with "Sophisticated Investor". As outlined under Section 708 of the Corporations Act 2001 (Cth), this classification refers to investors with net assets of at least $2.5 million, or a gross income of at least $250,000 for each of the past two financial years. An "ultra high net worth individual", on the other hand, is a person with at least $30 million in investable assets.

Institutional investor

An investor that is a traditional institution - for example, an investment bank, insurance company or hedge fund.


An initial public offering, whereby a company raises equity capital by offering shares to the public for the first time.

Issue price

The price at which a new security is distributed to the public prior to the new issue trading on the secondary market. Commonly referred to as "offering price".


Measure of the ability to buy or sell assets easily and with little impact on price.

Market capitalisation

The market value of a company's outstanding shares. This is calculated by multiplying the stock price by the total number of shares outstanding. Commonly referred to as "market cap".

Mezzanine finance

A hybrid of debt and equity financing that allows the lender the rights to convert to an equity interest in the company in case of default.

Mum and dad investors

Colloquial term referring to non-professional, small-scale, unsophisticated investors.

New issue

A security which is publicly offered for sale for the first time.


An option is a contract between two parties that gives the buyer the right, but not the obligation, to buy or sell a security at a specific, predetermined price on or before a certain date.

Outstanding shares

The number of shares that have been issued by a company which are held by the insiders and the general investing public.


The situation in which investors apply for less shares of a new security than are available.

Pathfinder prospectus

A pre-prospectus statement of financial condition that is sent to a limited group of people prior to a securities or IPO filing. May only be circulated to prospective underwriters, brokers and people who meet the requirements laid out in the Corporations Act as 708 Sophisticated Investors. Sometimes called a "red herring".

Price range

The price range at which the company expects to sell its stock in a public offering. Also called “offering range”.

Private placement

Investment in a company by a group of private investors. The offering is limited both by the amount of shares or units and the number of investors - recipients receive restricted stock from the issuer.

Professional investor

An investor who controls or manages gross assets of at least $10m, or a financial services licensee.

Prospective financial information

Financial information of a predictive nature, based on assumptions about events that may occur in the future and on possible actions by an entity.


A document produced by a company issuing new equity or debt, providing information about the offering and the company. Must be lodged with ASIC.

Retail investor

A person who purchases securities for their own personal account rather than for an organisation, generally on a small scale and in a non-professional capacity. Sometimes called "mum and dad investors".

Risk factors

Considerations that are disclosed in the prospectus for an investment opportunity that might materially affect the company’s financials, stock price or reputation in a negative way.


A presentation by the senior management of a company issuing securities to fund managers, financial advisors, analysts, and potential investors.


A "reverse takeover" - a type of merger that private companies use to become publicly traded without having to resort to the expense of an IPO (initial public offering). Initially, the private company purchases enough shares to control a publicly traded company. The private company's shareholders then use its shares in the private company to exchange for shares in the public company. At this point, the private company has effectively become publicly traded. Also known as a "reverse merger" or a "reverse IPO".


The US Securities and Exchange Commission.

Seed capital

The funding used to get a new business started. As the word "seed" suggests, this relates to a very early stage of financing. This initial funding often comes from the founders' personal assets, friends or family, and is used for funding initial operating expenses. It is rarely provided by lenders or institutional investors because startup is considered to be the riskiest stage in a company's lifecycle, and has the highest chance of failure (but because of the early stage of investment, it can also have very substantial rewards). This type of funding is often obtained in exchange for an equity stake in the enterprise.

Sophisticated Investor

As defined in s708 of the Corporations Act, an investor who has net assets of at least $2.5 million, or gross income of at least $250,000 for each of the past two financial years. Often also referred to as a "high net individual" or "708 investor".


1. The difference between the buy price and sell price of a stock. 2. Shareholder spread - the requirement that an issuer has a minimum number of investors to be listed on a securities exchange. 3. The amount of investors participating in a particular raising.


A broker who buys and sell securities on a stock exchange on behalf of both retail and institutional clients.

Ultra high net worth individual (UHNWI)

A person with at least $30 million in investable assets.


The situation in which the demand for shares in an IPO or capital raising is less than the number of shares issued.


A brokerage firm that raises money for companies using public equity and debt markets. Underwriters are financial intermediaries that buy stock or bonds from an issuer, then sell those stocks to the public.

Use of proceeds

The ways in which a company plans to use the money it generates from an IPO or other type of fundraising.


The process of identifying what a company expecting to go public is worth, used for consideration of whether the company is fairly valued. Depending on market conditions, this value can be revised by changing the expected price range for the IPO. An analyst placing a value on a company looks at the company's management, the composition of its capital structure, the prospect of future earnings, and market value of assets.


A warrant is similar to an option. It gives the investor the right, but not the obligation, to buy an underlying security at a certain price, quantity and future time. Unlike an option, however, a warrant is issued by a company - an option, on the other hand, is an instrument of the stock exchange. Companies will often include warrants as a part of a new-issue offering to attract buyers. A warrant can also increase a shareholder's confidence in a stock, provided the underlying value of the security does increase over time.

Working capital

The capital of a company used in day to day transactions, calculated by subtracting current liabilities from current assets.