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Switching - easier than you think Read our tips if you are thinking about switching bank accounts, home loans or credit cards |
Six safety checks to protect yourself1. Who is making the offer?Read the offer carefully to see exactly who is making it. Some offers have used official looking letterhead, or names that sound like your company or a stock exchange, and may be sent at the same time as a company’s own letters to shareholders. If you’re not sure, phone your company’s investor relations department to double check. You can also check the company's details through our National Names Index. 2. Why is the offer being made?Naturally, the company or person offering to buy wants to make money. Perhaps there is public information about something that is expected to happen to your shares that you may not know about. For shares traded on the Australian Stock Exchange (ASX), check company announcements on the ASX website www.asx.com.au, or talk to a stockbroker in case you have lost touch with important news that's been released to the market. 3. Do you really need to sell?Unless you really need the money now, you may do better by holding on. Consider what the shares are worth now, what they may be worth in the future, what dividends they may pay you, and so on. If you do need the money, consider all of your options. The Corporations Act sets time periods in which an offer once made, cannot be withdrawn – use this time wisely. 4. What's the market price for your shares?Get an up to date market price for your shares and compare it with the price being offered. Market prices can change daily, so check the most recent price for your shares on exchange websites, daily newspapers or a quick phone call to a stockbroker. While any offer you receive must quote the current market value it may be out of date. If you hold shares that are not sold on the ASX or any other exchange (known as unquoted shares), the offerer needs to state the fair market value in the offer document. You will then need to make a personal judgment about what they are really worth. As a shareholder, you are entitled to talk to the company you own the shares in about its plans, including possible listing on an exchange. Maybe other shareholders in your company would like to buy directly from you? 5. How much is the offer really worth?Watch out for two types of ‘low-ball’ offers. The first type offers significantly less than the share’s market value. The second type offers to pay you by instalments spread over many years. With this offer, even if the total offer price is higher than the present market value, the many years you may have to wait for all your instalments means you usually get far less than selling on the market. 6. Compare the cost of selling on the marketEven if you hold only a very few shares, you can still sell through a stockbroker. Non-advisory brokers will sell the shares for about $55-65 over the phone, or about $30-45 over the Internet. You will need to open an account, although this is pretty straightforward. The ASX will give you their names. |
