Death throes for 'predatory offers'

Robin Bowerman, Head of Retail at Vanguard Investments Australia.
Robin Bowerman, Head of Retail at Vanguard Investments Australia.

PERHAPS, it should be expected.

Operators of unscrupulous businesses that make unsolicited offers in the post to buy listed shares for way under their market value are making a last ditch effort to make fast money from unwary shareholders.

Their operations must surely be in their death throes as the Federal Government moves to stop what the Minister for Financial Services and Corporate law Chris Bowen calls their “predatory offers”.

As discussed by Smart Investing last month, the Government has released proposed amendments to the Corporations Act designed to stop these operators from having access to share registers.

Under the proposed amendments, access to share registers will be refused if the information is sought for an “improper purpose”. Significantly, improper purposes will include off-market offers to buy shares – other than for a company takeover.

The determination of some operators to squeeze every last cent before the Corporations Act is amended was shown again last week when an acquaintance was offered $2000 for his modest holdings in an insurance company.

The rub is that this portfolio has a market value of more than $5000. If the offer were accepted, it would amount to a huge profit margin for doing nothing apart from making what is commonly tagged as a low-ball offer.

Presumably, these businesses become more profitable as the sharemarket rises with many often elderly investors perhaps not keeping a check on how much the market is moving.

Remain alert for these operators – not only in your own interests but also in the interests of elderly parents and other relatives who may be vulnerable.

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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.

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