Wednesday 12 July 2006 06 – LAWFUEL – Law News Network – The Australian Securities and Investments Commission (ASIC) has urged shareholders in Investa Properties Ltd to be wary of an offer from Direct Share Purchasing Corporation Pty Ltd to buy their securities for less than half their market value.
Investa shareholders have been offered $1 per security – an amount well below current market value – from Direct Share Purchasing Pty Ltd, a company associated with Mr David Tweed.
‘Despite disclosing both the market and offer price for the shares and meeting all legal requirements, this offer is a bad deal because it substantially undervalues small shareholders’ Investa holdings,’ ASIC’s Deputy Executive Director, Consumer Protection, Ms Delia Rickard, said.
‘When you get an offer where the price is well below the market price, you can do a lot better selling the shares through a sharebroker. ‘As one shareholder noted, this latest letter appears to be an official document, like many genuine buy back offers that are made by companies,’ Ms Rickard said.
‘Inexperienced or elderly shareholders, or those under immediate financial pressure, are often most at risk of selling their shares without carefully reading the offer and clearly understanding the implications,’ she added.
‘Investa shareholders who receive this offer and don’t just throw it in the bin, should obtain professional financial advice if they are considering accepting it. Don’t sign until you fully understand that you are accepting a price which substantially undervalues your shares,’ Ms Rickard said.
Ms Rickard also noted that although it is not against the law to make an unsolicited offer to buy someone’s shares, it is illegal to mislead or deceive shareholders into accepting an offer. The offer must also comply with strict legal requirements, including the prohibition against misleading or deceptive or unconscionable conduct.
Background In April 2003, the Government introduced regulations governing these types of off-market offers, provide consumers more protection. Under the regulations a person who makes an unsolicited offer to buy shares off market for a certain price must provide: • a written statement setting out the market value of those shares on the day the offer is made; and • a minimum of one month in which to accept the offer.
ASIC’s consumer website FIDO at www.fido.gov.au contains more information, along with seven safety checks regarding unsolicited share offers. Alternatively, phone Infoline on 1300 300 630. For further information contact: Delia Rickard Deputy Executive Director, Consumer Protection Telephone: 02 6250 3801 Mobile: 0412 673 026 Emma Forehan ASIC Media Unit Telephone: 03 9280 3354 Mobile: 0409 702 310