COMM360 Notes
Week 1
Investor Relations: “Investor relations is a strategic management responsibility that
integrates finance, communication, marketing and securities law compliance to enable the
most effective two-way communication between a company, the financial community, and
other constituencies, which ultimately contributes to a company's securities achieving fair
valuation.”
“Investor Relations (IR) is the strategic two-way communication between a company and its
stakeholders including the investment community at large, of information about its
business activities and performance, financial and compliance data, growth strategy and
prospects, with the objective of enabling the market to make an informed decision about
the fair valuation and appropriate ownership of the shares and securities of the
company.”
“Investor Relations is the communication of information and insight between a company
and the investment community. This process enables a full appreciation of the company’s
business activities, strategy and prospects and allows the market to make an informed
judgment about the fair value and appropriate ownership of a company
Investor Relations is a strategic corporate marketing activity which combines the disciplines
of
communication and finance, providing investors with an accurate portrayal of a company’s
performance and prospects
IR != PR
PR= public relations—part of a company’s marketing programme; aims to present a
company’s business, products and services in the most favorable light possible; tend to put
more positive ‘spin’ on company’s activities
IR = investor relations—objective is to provide potential and investors with a fair understand
of a company’s strategy and business; needs to present a balanced view of the company
Rationale for Investor Relations == MONEY / get more capital; channel of market feedback
Common denominator in a bull and bear market: a need to compete for capital
Stakeholders in investment community: current shareholders, suppliers, media,
government, rating agencies, customers, societies and communities
4 reasons why companies need IR:
1. Deliver competitive advantage.
2. Regulatory Compliance
3. Optimize Management Time
4. Develop Reputation and Goodwill
,Investor relations is NOT a quick fix means of getting company’s share price up; a substitute
for good management; a substitute for operational short-comings; short-term fix; corporate
activity that can be turned on or off
SCOPE OF IR—IR is all about COMMUNICATION
6 IR activities:
1. External Communications
2. Message Development (-message is consistent-no selective disclosure-should not contain
price sensitive info-controlled communication channels)
3. Marketing
4. Crisis and Issue Management
5. Best Practice
6. Internal Communication (most important communication within organization is
communication with the Board of directors)
Capital Markets are financial markets for buying and selling equity and debt instruments
(medium to long term); have numerous participants including individual investors,
institutional investors, governments, companies, banks and financial institutions, etc
- Primary markets: new stock and bond issues are sold to investors
- Secondary markets: trade existing securities
KEY REGULATORS
MAS=Monetary Authority of Singapore—overall responsibility for capital market
regulation, including oversight of SGX; activities pertaining to the Securities, Futures and
Funds Management are governed under Securities and Futures Act (SFA)
MAS (SIC)—Securities Industry Council—administers and enforces the Singapore Code on
Take-overs and Mergers (Take-over Code); issues guidance notes
SGX—regulated by MAS; front-line regulator and operator of securities and derivatives
markets; supervises the market from both trading and clearing aspects; overall
responsibility for Listing Manual and Corporate Disclosure Policy
SGX (SGX RegCo)—Singapore Exchange Regulation—wholly owned subsidiary of SGX that
undertakes all frontline regulatory functions on behalf of SGX and its regulated subsidiaries;
MAS maintains oversight of regulatory responsibilities as performed by SGX RegCo;
supervises compliance of listed issuers
CAD—Commercial Affairs Department—the principal white-collar crime investigation
agency in Singapore
, Investment banks: investment banker is a primary factor in corporation’s operations; focus
is on role investment banker plays in relation to the supply of capital
Institutional shareholders: pension funds, mutual funds, insurance companies, foundations,
endowments
Activist shareholders: often hedge funds; short term view of investment, looking to make
quick profit; pressure weak performing entities management to follow their wishes
Retail investors: small; individual investors
Securities Investors Association of Singapore (SIAS)—a charity and Institution of Public
Character; the largest organized investor group in Asia; the voice for minority shareholders
TYPES OF SECURITIES
Equity = Ownership; shares which represent ownership in a business enterprise; common
stock/preferred shares/convertible preference shares
Equities: Warrants—type of security that entitles the holder to buy a proportionate amount
of common stock at specified price; usually higher than market prices; lifespan usually years
Equities: Rights—privilege granted to existing shareholders to subscribe to shares of new
issue of common stock before it is offered to public; usually a specified price lower than
market value; lifespan 2-4 weeks
REIT—Real Estate Investment Trust—security that sells like a stock on major exchanges and
invests in real estate directly, either through properties or mortgages
Business trusts—business enterprises set up as trusts, instead of companies; hybrid
structures with elements of both companies and trusts.
Stapled securities—an arrangement under which different securities are quoted jointly;
combined securities traded as one security under one trading name; commonly used in
Australia
Exchange Traded Funds (ETF)—security that tracks an index, a commodity or a basket of
assets like an index fund; trades like a stock on exchange
Bonds—interest-bearing or discounted government or corporate security
SGX Mainboard—minimum % of post-IPO shares in public hands between 12%-25% and a
shareholding spread of at least 500 shareholders
SGX Catalist Board—no prescribed financial entry criteria; minimum 15% in public hands
and shareholding spread of at least 200 shareholders
Week 1
Investor Relations: “Investor relations is a strategic management responsibility that
integrates finance, communication, marketing and securities law compliance to enable the
most effective two-way communication between a company, the financial community, and
other constituencies, which ultimately contributes to a company's securities achieving fair
valuation.”
“Investor Relations (IR) is the strategic two-way communication between a company and its
stakeholders including the investment community at large, of information about its
business activities and performance, financial and compliance data, growth strategy and
prospects, with the objective of enabling the market to make an informed decision about
the fair valuation and appropriate ownership of the shares and securities of the
company.”
“Investor Relations is the communication of information and insight between a company
and the investment community. This process enables a full appreciation of the company’s
business activities, strategy and prospects and allows the market to make an informed
judgment about the fair value and appropriate ownership of a company
Investor Relations is a strategic corporate marketing activity which combines the disciplines
of
communication and finance, providing investors with an accurate portrayal of a company’s
performance and prospects
IR != PR
PR= public relations—part of a company’s marketing programme; aims to present a
company’s business, products and services in the most favorable light possible; tend to put
more positive ‘spin’ on company’s activities
IR = investor relations—objective is to provide potential and investors with a fair understand
of a company’s strategy and business; needs to present a balanced view of the company
Rationale for Investor Relations == MONEY / get more capital; channel of market feedback
Common denominator in a bull and bear market: a need to compete for capital
Stakeholders in investment community: current shareholders, suppliers, media,
government, rating agencies, customers, societies and communities
4 reasons why companies need IR:
1. Deliver competitive advantage.
2. Regulatory Compliance
3. Optimize Management Time
4. Develop Reputation and Goodwill
,Investor relations is NOT a quick fix means of getting company’s share price up; a substitute
for good management; a substitute for operational short-comings; short-term fix; corporate
activity that can be turned on or off
SCOPE OF IR—IR is all about COMMUNICATION
6 IR activities:
1. External Communications
2. Message Development (-message is consistent-no selective disclosure-should not contain
price sensitive info-controlled communication channels)
3. Marketing
4. Crisis and Issue Management
5. Best Practice
6. Internal Communication (most important communication within organization is
communication with the Board of directors)
Capital Markets are financial markets for buying and selling equity and debt instruments
(medium to long term); have numerous participants including individual investors,
institutional investors, governments, companies, banks and financial institutions, etc
- Primary markets: new stock and bond issues are sold to investors
- Secondary markets: trade existing securities
KEY REGULATORS
MAS=Monetary Authority of Singapore—overall responsibility for capital market
regulation, including oversight of SGX; activities pertaining to the Securities, Futures and
Funds Management are governed under Securities and Futures Act (SFA)
MAS (SIC)—Securities Industry Council—administers and enforces the Singapore Code on
Take-overs and Mergers (Take-over Code); issues guidance notes
SGX—regulated by MAS; front-line regulator and operator of securities and derivatives
markets; supervises the market from both trading and clearing aspects; overall
responsibility for Listing Manual and Corporate Disclosure Policy
SGX (SGX RegCo)—Singapore Exchange Regulation—wholly owned subsidiary of SGX that
undertakes all frontline regulatory functions on behalf of SGX and its regulated subsidiaries;
MAS maintains oversight of regulatory responsibilities as performed by SGX RegCo;
supervises compliance of listed issuers
CAD—Commercial Affairs Department—the principal white-collar crime investigation
agency in Singapore
, Investment banks: investment banker is a primary factor in corporation’s operations; focus
is on role investment banker plays in relation to the supply of capital
Institutional shareholders: pension funds, mutual funds, insurance companies, foundations,
endowments
Activist shareholders: often hedge funds; short term view of investment, looking to make
quick profit; pressure weak performing entities management to follow their wishes
Retail investors: small; individual investors
Securities Investors Association of Singapore (SIAS)—a charity and Institution of Public
Character; the largest organized investor group in Asia; the voice for minority shareholders
TYPES OF SECURITIES
Equity = Ownership; shares which represent ownership in a business enterprise; common
stock/preferred shares/convertible preference shares
Equities: Warrants—type of security that entitles the holder to buy a proportionate amount
of common stock at specified price; usually higher than market prices; lifespan usually years
Equities: Rights—privilege granted to existing shareholders to subscribe to shares of new
issue of common stock before it is offered to public; usually a specified price lower than
market value; lifespan 2-4 weeks
REIT—Real Estate Investment Trust—security that sells like a stock on major exchanges and
invests in real estate directly, either through properties or mortgages
Business trusts—business enterprises set up as trusts, instead of companies; hybrid
structures with elements of both companies and trusts.
Stapled securities—an arrangement under which different securities are quoted jointly;
combined securities traded as one security under one trading name; commonly used in
Australia
Exchange Traded Funds (ETF)—security that tracks an index, a commodity or a basket of
assets like an index fund; trades like a stock on exchange
Bonds—interest-bearing or discounted government or corporate security
SGX Mainboard—minimum % of post-IPO shares in public hands between 12%-25% and a
shareholding spread of at least 500 shareholders
SGX Catalist Board—no prescribed financial entry criteria; minimum 15% in public hands
and shareholding spread of at least 200 shareholders
