Consequences of leaving myself with an unmarketable parcel of shares

[mattsharp]

I have a holding in a company, and I'm planning to sell it. I am thinking of keeping a small amount to remain eligible for any SPPs they offer in the future. As I see it, my options are:

a) Sell all the shares.
b) Leave myself holding a single share.
c) Leave myself with a bit over $500 worth of it.

If I take option b, what are the consequences? Obviously I will have a hard time getting rid of it, and it will take just as much administrative burden as a bigger holding. Will I get treated weirdly by the share registry or company? Can they compulsorily acquire it? Will my broker or the ASX stop me from doing it?

If I try for option c, and it drops below $500, what are my options?

 

[skyQuake]

I have a holding in a company, and I'm planning to sell it. I am thinking of keeping a small amount to remain eligible for any SPPs they offer in the future. As I see it, my options are:

a) Sell all the shares.
b) Leave myself holding a single share.
c) Leave myself with a bit over $500 worth of it.

If I take option b, what are the consequences? Obviously I will have a hard time getting rid of it, and it will take just as much administrative burden as a bigger holding. Will I get treated weirdly by the share registry or company? Can they compulsorily acquire it? Will my broker or the ASX stop me from doing it?

If I try for option c, and it drops below $500, what are my options?

b) is perfectly fine. You'll still get all the annual reports and notifications etc. You'll just have to throw out a lot of mail in the future.
The company generally doesn't care until they are paying significant costs mailing out stuff. (rare)

 

[burglar]

... keeping a small amount to remain eligible for any SPPs they offer in the future ...

Are the SPP's so hot?

My personal experience tells me no!

The share price can drop dramatically.
I have been able to pick up a parcel on the market at, or below, the SPP premium price.

The most annoying aspect is that they dictate the timing to you.

In the days of altruism and chivalry, you would be helping a struggling company.
Today, they help themselves.

JMO

 

[mattsharp]

Are the SPP's so hot?

My personal experience tells me no!

The share price can drop dramatically.
I have been able to pick up a parcel on the market at, or below, the SPP premium price.

The most annoying aspect is that they dictate the timing to you.

In the days of altruism and chivalry, you would be helping a struggling company.
Today, they help themselves.

JMO

I agree in general, and I leave most of them to go through to the keeper. I'm just trying to work out what it would cost me to keep that door open for the times where it is worth hitting the SPP.

b) is perfectly fine. You'll still get all the annual reports and notifications etc. You'll just have to throw out a lot of mail in the future.
The company generally doesn't care until they are paying significant costs mailing out stuff. (rare)

Thanks for the confirmation. Most of the stuff from them is already electronic.

 

[Value Collector]

b) Leave myself holding a single share.
?

Don't be that guy,

 

[mattsharp]

How does "that guy" bother you?

 

[Value Collector]

How does "that guy" bother you?

I just see it as unproductive and wasteful, it costs the company much more to maintain your holding than your holding actually generates in earnings.

At least keep a marketable parcel,

 

[burglar]

I just see it as unproductive and wasteful, it costs the company much more to maintain your holding than your holding actually generates in earnings.

At least keep a marketable parcel,

How does one keep a marketable parcel?

 

[pixel]

How does one keep a marketable parcel?

You watch the share price (I'm sure you do that regularly anyway ) and multiply it with the number of shares you hold. That's your parcel's Market Value. If it drops below $500, you top up. Voila! It's marketable again.

Back to the OS's question:
Even though there are regular offers by companies to sell unmarketable parcels, nobody can force you to sell your last share, even if it's worth less than a cent. Some people collect stamps, others may collect Annual Reports. And even a 1c holding entitles you to a paper copy of every bit of communication the company is obliged to issue.
*** Not that I would advocate that kind of behaviour. *** There are better ways to stay abreast of companies' fundamentals...

 

[pixel]

PS: As an example of unmarketable sale offers, check http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01537011
or http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01536785

Both include the option of not selling.

 

[skc]

Are the SPP's so hot?

Not all SPPs are hot. But all SPPs give you the optionality to acquire stock. On that basis alone it's worth keeping some some parcel to secure the right to participate.

b) Leave myself holding a single share.

You can sell shares even if it is below $500... IIRC (or may be it depends on the broker). But leaving a single share might be a bit extreme. May be leaving a parcel that at least covers the brokerage cost should you need to sell?

 

[pixel]

Not all SPPs are hot. But all SPPs give you the optionality to acquire stock. On that basis alone it's worth keeping some some parcel to secure the right to participate.

Many SPPs will limit your entitlement to a fraction or multiple of the number of shares you hold.
Example: the recent LOM issue of "Loyalty Options". or non-renounceable rights to acquire one for every two held.

 

[skyQuake]

Many SPPs will limit your entitlement to a fraction or multiple of the number of shares you hold.
Example: the recent LOM issue of "Loyalty Options". or non-renounceable rights to acquire one for every two held.

Yeah with rights issues you'll get nothing, but SPPs favor the small end of town with up to $15k in allocation no matter how small your holdings are.
CSS was a sorta recent example of a good deal

 

[mattsharp]

I just see it as unproductive and wasteful, it costs the company much more to maintain your holding than your holding actually generates in earnings.

At least keep a marketable parcel,

Fair enough.

I have already opted for electronic communications and statements wherever I can, and direct deposit of dividends (which I assume is cheaper than mailing out a cheque). I admit I don't know how much it would cost the company to maintain the holding electronically, but it should just be record in a database. I'm not trying to be annoying about it.

Many SPPs will limit your entitlement to a fraction or multiple of the number of shares you hold.
Example: the recent LOM issue of "Loyalty Options". or non-renounceable rights to acquire one for every two held.

Rights issues (either renouncable or not) are a far more equitable way of doing things, and I would rather that be the common way of raising capital. Unfortunately, ASIC stupidity usually means that a rights issue needs a prospectus whereas SPPs don't. So unfortunately SPPs and placements rule.

 

[burglar]

... May be leaving a parcel that at least covers the brokerage cost should you need to sell?

I once had a parcel that was valued less than brokerage.
I offered to send a cheque for the AUD$0.17, but the broker waived the difference.