Low share offer spark for review

The Securities Commission is looking to take a tougher stance on access to share registers and the disclosure of true market values in a bid to stymie predatory offers for investments.

This comes after thousands of investors were targeted by Christchurch businessman Bernard Whimp in an offer for shares in top listed companies at up to two thirds of their market value.

Whimp has a track record for making low-ball offers for shares and debentures, including DNZ Property Fund, South Canterbury Finance and Strategic Finance.

Despite the offers being at a substantial discount to the market value of the shares, some investors contacted the Herald to say they had signed and returned the documents believing them to be an official correspondence from the companies involved.

It is not illegal to make an unsolicited offer to buy investments for less than the market value, although it was against the law to mislead or deceive investors into accepting an offer.

Many readers were appalled to discover their contact details had been accessed for Whimp to make the offer.

The Securities Act requires any issuer of securities offered to the public to maintain a register that includes the name and address of the holder and the amount of the securities held.

This register can be inspected for free by holders of the securities or for a 20c per page fee by any other person.

In Australia concerns around accessing share registers to make predatory offers has resulted in a proposal to allow companies to knock back requests they perceive to be improper.

Britain has a similar regime in force with the company able to refer requests it believes are improper to the court for a ruling.

Sue Brown, director of investigations and litigations at the Securities Commission, told National Radio yesterday the commission was looking at whether it needed to make it tougher to access share registers or make it a requirement to include the market value of the shares with offers.

"We've had discussions with the Ministry of Economic Development about these issues. Of course Australia had some issues of this type a few years ago and responded by amending its legislation. That's something that I'm certainly interested in having a look at," said Brown.

In a discussion document released in June the Ministry of Economic Development said it was not convinced New Zealand needed to adopt the British approach or those proposed in Australia.

"We have yet to see evidence to suggest that there is a significant problem in New Zealand, but we would be interested in evidence where access to registers has resulted in significant disadvantage," it said.

The ministry said issues arise around predatory offers rather than any offers to existing security holders.

It said there were risks around the company or the courts determining whether or not an offer was predatory and suggested as an alternative a statement be included with any unsolicited offer made as a result of accessing the securities register.

WHAT TO DO

Before accepting an unsolicited offer ask:

* Who is making the offer?

* What does the person making the offer stand to gain?

* Do you really need to sell now?

* What is the market price for your investment?

* How much is the offer really worth?

Source: Securities Commission