06-178 Underpriced share offer for AMP shares
Monday 5 June 2006
AMP Ltd shareholders who have received an offer of $6 per share from Direct Share Purchasing Corporation Pty Ltd, a company associated with Mr David Tweed, will get more money for their shares by selling through a sharebroker, according to ASIC.
The offer made is nearly $4 per share less than what the shares can currently be sold for on the market.
‘While this offer meets all legal requirements because it discloses both the market and the offer price for the shares, the offer substantially undervalues small shareholders’ AMP holdings and is a bad deal’, Mr Greg Tanzer, ASIC’s Executive Director, Consumer Protection 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.’
‘AMP shareholders who receive this offer should obtain professional financial advice before making a decision to accept it. The document should not be signed before the recipients of the offer fully understand that they are accepting a price which substantially undervalues their shares.’
ASIC has seen an increase in the number of unsolicited share offers in recent years. While ASIC continues to work with relevant stakeholders to educate and caution people about acting on unexpected offers to buy their shares, it is important that the public are also able to better protect themselves from such offers which, while ill-advised, are not illegal.
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.
‘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’, Mr Tanzer said.
Background
In April 2003, the Government introduced regulations governing these types of off-market offers to provide consumers with 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.
Check out FIDO's seven safety checks regarding unsolicited share offers. Alternatively, phone Infoline on 1300 300 630.
FIDO Website: Printed 09/07/2010
