1 ScriptsSlides/AFF2701/Alternative Capital markets.docx 3/24/2011I’ve spent the last hour or so talking about the main game, the ASX, the Exchange that deals with the big end of town. But a healthy capital market is much more than that. Small companies need capital too –and it’s the small companies that can be the drivers of the economy - and that join the mainstream sometime in the future. It’s also a territory that I’ve been directlyinvolved with over the years, both as a consultant to early stage businesses and as a founding director of what’s now become the National Stock Exchange of Australia, NSX. A kind of Australian NASDAQ. Although I’ve long since retired as a Director, I’m presently the Chairman of the Committee that approves (or otherwise) the admission of new companies and new stockbrokers to the NSX. Slide 12So … the territory I’m going to cover:Why have a Small-cap exchange? Capital market segments Market Functions NSX/BSX Government and the Law Micro-cap: theSMEboard Private Equity What I’ll be talking about is some things that fill the gap in the capital market infrastructure that the Australian Stock Exchange, the ASX, leaves alone: a market for the securities offered by companies that have less than the 500 shareholders ASX requires. The jargon calls them Small-caps and SMEs. We sometimes even hear talk of Micro-caps. You probably can guess what I mean by Small-cap, but let me just reiterate: the capitalization of a company is the number you get when you multiply the company’s share price by its number of shares on the share register (including those that it still holds). So a company with 10 million shares that are worth a dollar has a capitalization of $10 million. There’s no hard and fast rule about what’s Small-cap –but anything less than $10 million just about qualifies. The main thing to know is that Small-caps are companies that are just beginning to deal with the capital market. And that can either be because they’re raising capital or because their shareholders expect to manage their investments on what the Corporations Act calls a fair, transparent and orderlymarket.
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