Unexpected offers to buy your shares
Have you received an unexpected letter offering to buy some of
your shares? These offers often try to buy your shares for much
less than the current market price. You should be aware of some
pitfalls if you get such an offer.
Find out who is making the offer and
Some offers use an official-looking letterhead, or names that
sound like the company you have shares in or a stock exchange. They
may also be sent at the same time as your company's real
If you're not sure, phone your company's investor relations
department to double check. You can also check ASIC Connect and search
within 'organisation and business names' for the company's
Naturally, the company or person making the offer wants to make
money. Maybe there is public information about something that is
about to happen to your shares that you may not know about.
Check company announcements on the ASX or talk to a
stock broker in case you missed important news that was released to
Find out how much the shares are
Get an up-to-date market price for your shares and compare it
with the price being offered. You can check with the company,
the ASX or a stockbroker.
Use the ASX find a broker tool to help you find
a broker that suits your needs.
Watch out for low ball offers
Watch out for two types of 'low-ball' offers. The first offers
much less than the share's market value e.g. your shares are worth
$10 but the buyer offers only $5.
The second offers to pay you by instalments spread over many
years. Even if the total offer price is higher than the present
market value, you have to wait years for all your payments e.g.
your shares are worth $10 and the buyer offers to pay $1 per year
for 11 years.
Check the contents of the
The law restricts the manner in which an offer can be made. For
example, the offer document should be dated and identify who is
making the offer and give you at least one month in which to
It must also state:
- The price offered
- If you will be paid in instalments
- How and when those instalments will be paid
If you hold shares that are not sold on the ASX or any other
exchange, the person or company making the offer needs to state in
the offer document a fair estimate of the value at the date the
offer was made. They also need to provide an explanation of how
they arrived at this estimate.
If you hold shares that are sold on the ASX or any other
exchange then the offer document needs to tell you the market price
for those shares the day the offer is made.
Report the offer
Although it is not illegal to make an unsolicited offer to buy
your shares, it is against the law to mislead shareholders into
accepting an offer or make an offer in a manner which breaches the
law. Check the contents of the offer carefully.
To report an unexpected offer which you believe is against the
law, visit ASIC: do you have a
question? or call 1300 300 630.
Case study: George receives a mysterious letter
George, 38, received a letter about a company he
had invested in. The letter asked George if he was interested in
selling his shares. The price offered was lower than the market
price which was also quoted in the letter. This made
George think twice. When he called the company's investor relations
department, he found out that they had issued a warning for
shareholders not to respond to the offer. George was glad
he checked first before selling his shares.
If you receive a letter offering to buy your
shares, and you're wondering if it's legitimate, check with the
company or speak to your stock broker. It's better to be safe than
Last updated: 17 Aug 2015