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ASIC issues warning to small investors

THE Australian Securities and Investments Commission has warned investors to be alert to unexpected offers to buy their shares.

Many Australian companies offer to buy shares from small shareholders in public companies by issuing unsolicited offers by mail, which could leave shareholders in a difficult position, ASIC says.

“Often these unsolicited offers come at a price below the current market price,” ASIC consumer protection executive director Peter Kell said.

“While that may be legal, it’s worth checking the real value of your shares, the cost of selling on the market, and whether it’s wise to sell or hold on.”

A number of questions should be asked.

Who is making the offer? ASIC said an off-market offer may not come with all the normal investor protection that applied when selling through a broker.

Why is the offer being made? Perhaps there is public information about something that is expected to happen.

Do you really need to sell the shares? What’s the market price for your shares? Compare the cost of selling on the market.

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