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Blue chip securities


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Blue chip securities

  1. 1. Blue Chip Securities 1. Stock in a well-known and highly respected publicly-traded company. Blue chip companies are usually financially sound and are thought to be relatively low-risk investments. They tend to be less volatile than other companies and to provide solid growth to portfolios. Examples in the United States include General Electric and Coca-Cola. Indices such as the Dow Jones Industrial Average tracks blue chip stocks. 2. A very high quality investment involving a lower-than-average risk of loss of principal or reduction in income. The term is generally used to refer to securities of companies having a long history of sustained earnings and dividend payments. List of Blue Chip Securities Companies 1. Pakistan State Oil 2. Fatima Fertilizer 3. Fauji fertilizer 4. Pakistan Telecom Communication 1
  2. 2. CRITERIA for SSE, MSE & ESE according to ICAPQualifying EntitiesEntities which qualify to use this standard as framework for preparation of their financialstatements are defined hereunder. Compliance with MSE Framework and Standard isnecessary for an MSE in order to give a ‘true and fair view’ while preparing its financialstatements.MEDIUM-SIZED ENTITY (MSE)A Medium-Sized Entity (MSE) is an entity that:(a) is not a listed company or a subsidiary of a listed company;(b) Has not filed, or is not in the process of filing, its financial statements with theSecurities and Exchange Commission of Pakistan (SECP) or other regulatoryorganization for the purpose of issuing any class of instruments in a public market;(c) does not hold assets in a fiduciary capacity for a broad group of outsiders, such as abank, insurance company, securities broker/dealer, pension fund, mutual fund orinvestment banking entity;(d) is not a public utility or similar entity that provides an essential public service;(e) is not economically significant on the basis of criteria as defined in paragraph 3below; and(f) is not a Small-Sized Entity (SSE) as defined in paragraph 4 below. 2
  3. 3. Economically Significant EntityAn entity is considered to be economically significant if it has:(i) Turnover in excess of Rs. 1 billion, excluding other income;(ii) Number of employees in excess of 750;(iii) Total borrowings (excluding trade creditors and accrued liabilities) in excess of Rs.500 million.In order to be treated as economically significant any two of the criterion mentioned in(i), (ii) and (iii) above have to be met. The criteria followed will be based on the previousyear’s audited financial statements. Entities can be delisted from this category wherethey do not fall under the aforementioned criteria for two consecutive years.SMALL-SIZED ENTITY (SSE)A Small-Sized Entity (SSE) is an entity that:(i) Has paid up capital plus undistributed reserves (total equity after taking into accountany dividend proposed for the year) not exceeding Rs. 25 million; and(ii) Has annual turnover not exceeding Rs. 200 million, excluding other income. In orderto qualify as a Small-Sized Entity, both of the above-mentioned conditions must besatisfied. 3
  4. 4. PAKISTANAccording to Securitas And Exchange Commission of Pakistan SME means an entity,ideally not a public limited company, which does not employ more than 250 persons (if itis manufacturing /service concern) and 50 persons (if it is trading concern) and alsofulfills the following criteria of either ‘a’ and ‘c’ or ‘b’ and ‘c’ as relevant: (a) A trading/service concern with total assets at cost excluding land and building up to Rs 50 million. (b) A manufacturing concern with total assets at cost excluding land and building Up to Rs 100 million. (c) Any concern (trading, service or manufacturing) with net sales not exceeding Rs 300 million as per latest financial statements.EuropeEU Member States traditionally have had individual definitions of what constitutes anSME. For example, the traditional definition in Germany had a limit of 255 employees,while, for example, in Belgium it could have been 100.In July 2011, the European Commission said that it would open a consultation on thedefinition of SMEs in 2012. In Europe, currently there are three broad parameters whichdefine SMEs — micro-entities are companies with up to 10 employees; smallcompanies employ up to 50 workers, whilst medium-sized enterprises contain up to 250employees.United StatesIn the United States, the Small Business Administration sets small business criteriabased on industry, ownership structure, revenue, and number of employees, which insome circumstances may be as high as 1500 though is typically capped at 500.Both the US and the EU generally use the same threshold of fewer than 10 employeesfor small offices (SOHO). 4