According to Webster’s Dictionary, the definition of “disclose” is to uncover or reveal. Company disclosure is the release of all relevant information on a company. The disclosure is as important to a research report as footnotes are to a corporate financial report.
The Securities and Exchange Commission requires that all research reports contain a disclosure statement. If it doesn’t have, it can’t be trusted. It also provides other warning-like statements that investors should be aware of.
Publicly-listed companies in the Philippine Stock Exchange must follow all the disclosure requirements and regulations. PSE Edge is the official disclosure tool of the PSE that everyone can learn and use to their own advantage. Just click this link http://edge.pse.com.ph/ to go to the site or you can download the app.
Here are types of company disclosures that you may need to familiarize and so that you can benefit from them moving forward.
Material Information/Transaction
An information a company releases that might affect the price movement of the company stock or influence people’s investment decision. Material information may include significant company events and spectacular earnings results.
It is also price-sensitive to company’s developments such as new projects, signing of agreements and receipt of an award, substantial transactions, resignation of its directors or the disposal of shares of big stakeholders.
MERGER
A merger is an agreement that unites two existing companies into one new company. One has to be a surviving company. There are several reasons why companies complete mergers but all of these are done to benefit both companies.
Mergers are most commonly done to gain market share, reduce costs of operations, expand to new territories, unite common products, grow revenues and increase profits, all of which should benefit the firms’ shareholders. After a merger, shares of the new company are distributed to existing shareholders of both original businesses.
Acquisition/Disposition Of Shares
Acquisition takes place when the bigger company purchases most or all of the smaller company’s shares, in order to take control of it. While disposition of shares is the selling of significant number of shares from stakeholder to another, or from one company to another.
It occurs when the bigger company obtains more than 50% ownership in a target company.This purchase allows the acquiring company to make significant decisions regarding the newly acquired assets without the approval of the target company’s minority shareholders.
Press Release
Companies regularly send out news to inform the public about a new product, quarterly earnings report, or any other material news. Technically, anything deliberately sent to a reporter or media source is considered a press release: it is information released by the act of being sent to the media.
However, public relations professionals often follow a standard format that they believe is efficient and increases their odds of getting the publicity they desire. The format is supposed to help journalists separate press releases from other PR communication methods, such as pitch letters or media advisories.
News Clarification
This aims to clear, affirm or deny published related news article from reliable news outlets so as to make sure that these information will not mislead the investing public. The main goal is to protect the interest of the investors and to maintain the integrity of the company.
Reply From The Exchange Inquiry
When there is a published article and there’s a need for more clarification for that matter, Philippine Stock Exchange will send a letter for clarification to that certain company requiring a response in a timely manner. This also applies for clarifications on the company’s ongoing activities such as buy-back programs, unusual movement of company’s stock price, and others.
Change In Shareholdings Of Directors
There are many tips to benefit from company disclosures but one has held up extremely well: if executives, directors or others with inside knowledge of a public company are buying or selling shares, investors should consider doing the same thing. Research shows that insider trading activity is a good catalyst in market and sector sentiment.
The idea for following insiders makes a lot of sense. Executives and directors have the most up-to-date information on their companies’ prospects. Intimately acquainted with cyclical trends, order flow, costs and other key ingredients of business success, these insiders are way ahead of analysts and portfolio managers, not to mention individual investors.
Insiders’ decisions to trade in their own companies’ stocks are certainly worth following.
Declaration Of Dividends
Companies share their earnings through dividend whether cash or by stock dividend, or by share of a property, or of another stock. They may also provide stock rights offering . When a corporation declares a cash dividend on its stock, its retained earnings are decreased and its current liabilities are increased. Thus, giving of dividends is a company’s discretion.
Share Buy-Back
When the company repurchases shares that are owned publicly, it manifests stakeholders’ confidence towards their own company which could yield a positive result from potential and existing investors. It represents a more flexible way of returning money to shareholders.
Companies typically have two uses for profits. Firstly, some part of profits can be distributed to shareholders in the form of dividends or stock repurchases. The remainder, termed “retained earnings”, are kept inside the company and used for investing in the future of the company, if profitable ventures for reinvestment of retained earnings can be identified.
Information Statement
This type of disclosure will give you the details for upcoming stockholder’s meeting either regular or special meeting. Since part of the stockholder’s privileges is to attend company events such as annual stockholder’s meeting, investors are given opportunity to decide whether to exercise this right or not.
For those interested investors, please take note the record date of the stock for eligibility. You also need to notify your brokerage company so that you will be accommodated and to make sure that there will be no problem once you are already in the venue.
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