Guide to Analysing Companies

Registered security
A security whose owner has to be registered with its issuer.
When the security changes hands, the new owner has to inform
the issuer of the change. In most developed countries, every
company is obliged to keep a register of the owners of its shares.
In it are recorded the owners’ names and addresses (or of the
appointed nominees), the day they became shareholders and
the day they ceased to be. The place where this register is kept
(and where it is open to the public) is the registered office of the
company (or that of its designated registrar). (See also bearer
security.)
Regulation Fair Disclosure
A set of rules in the United States designed to put private in-
vestors on the same footing as big institutional ones. Issued by
the securities and exchange commission in 2000, Reg
fd, as it is known, prohibits the selective disclosure of material
information to professionals in the securities industry (ana-
lysts, fund managers and the like) by public companies.
Until the rules were introduced, companies often gave profes-
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sionals titbits in advance of the general public because they
were keen to keep big investors on their side. Despite expected
arguments over the definition of “material”, the rules have done
much to level the playing field between private and profes-
sional investors. To many, though, Reg fd was a small victory
compared with the damage done to shareholders by companies
such as Enron and WorldCom, which for years misled investors
by declaring profits that did not exist.
Reinsurance
An insurance company’s insurance; the practice among in-
surers of spreading the risk that they take on. An insurer will
reduce its liability – for example, of a satellite not reaching its
required orbit – by laying off part of the risk with a reinsurance
company. The reinsurer may accept only a layer of the potential
liability – for example, of a payout between $10m and $20m –
should the ultimate client claim. Reinsurance, like the insurance
industry as a whole, is highly cyclical. As premiums rise, more
capital is sucked into the industry until supply exceeds demand,
and premiums start to drop again. During such times both in-
surers and reinsurers hope to make up from investment
returns what they lose from accepting unprofitable business.
Remittance
The earnings that migrant workers send from their place of
work to their families in their country of origin. For countries
such as Turkey or the Philippines, these earnings are a signifi-
cant source of foreign exchange. “Remittance basis” is the
term used to describe the principle used in taxing overseas
income. The income is taxed as and when it is remitted to the
jurisdiction of the receiving country.