Direct share buying plans

[Mouse]

Hi,

I've been reading a lot of "how to make money in shares" books lately, and one idea I came across that seems interesting is a share plan where you organise with the company to buy a certain $ worth of their shares automatically at the going price each month. Eg, organise with BHP to buy $100 worth of BHP shares on the 15th of each month. According to the book it's a way to accumulate shares without paying brokerage fees.

Unfortunately I can't remember which book it was in, only that the book was an American one which makes me wonder if any companies over here do something similar? I know that managed funds do, but I want to have a little bit more input into which shares I buy.

So my questions are ...

Does anyone know any Aussie companies that do this?
Has anyone tried this or heard of it before?
Does anyone have some thoughts on this as an investment strategy for someone on a low income who can save a little each month?

Thanks in advance for any replies.

cheers
Mouse

BHP is only used as an example here, I have no idea if they do this!!

 

[ob1kenobi]

Hi,

I've been reading a lot of "how to make money in shares" books lately, and one idea I came across that seems interesting is a share plan where you organise with the company to buy a certain $ worth of their shares automatically at the going price each month. Eg, organise with BHP to buy $100 worth of BHP shares on the 15th of each month. According to the book it's a way to accumulate shares without paying brokerage fees.

Unfortunately I can't remember which book it was in, only that the book was an American one which makes me wonder if any companies over here do something similar? I know that managed funds do, but I want to have a little bit more input into which shares I buy.

So my questions are ...

Does anyone know any Aussie companies that do this?
Has anyone tried this or heard of it before?
Does anyone have some thoughts on this as an investment strategy for someone on a low income who can save a little each month?

Thanks in advance for any replies.

cheers
Mouse

BHP is only used as an example here, I have no idea if they do this!!

Mouse, firstly welcome to ASF. What I'm about to say is merely my opinion from what knowledge I have.

There are broker sponsored and issuer sponsored shares.

Broker sponsored shares are bought via the ASX using a broker. Issuer sponsored shares is "an arrangement under CHESS where a company acts as sponsor for its own shares, other than those already covered by a specific broker sponsorship. The shareholder is alloted a unique Securityholder Reference Number SRN...No specific agreement is needed for issuer sponsorship, as the contractual aspects are covered by the company's own rules" (Renton's Dictionary of Stock Exchange & Investment Terms P159). An example of this might be where BHP issues its employees with shares instead of cash as a reward for performance.

Another possibility is an off-market transfer. This requires the completion of a Standard Transfer Form. The way this could happen is if I own 1500 shares in ANZ. My niece asks if she can buy 500 of them at $24-00 / share. I agree, we complete the form and exchange monies. The share registry receives the form and 500 shares in ANZ are transferred into my niece's name. I retain the other 1000 shares in ANZ obviously. Note that using this method still leaves you liable to Capital Gains Tax on any profit made.

I haven't heard of trades happening the way you described. That doesn't mean it's not possible!

Computershare is one of the larger share registry. They had the following information on their website. Perhaps it is worth contacting them.

 

[Mouse]

Thanks Ob1,

These are definately issuer sponsored. I might write to the ASX and see if they have ever heard of it.

cheers
Mouse

 

[ob1kenobi]

Thanks Ob1,

These are definately issuer sponsored. I might write to the ASX and see if they have ever heard of it.

cheers
Mouse

Mouse, not a problem, glad to be of some help. I think you're wise in contacting the ASX, get it from the horses mouth. As I said the other option is to contact a share registry the such as Computershare, as they should also know. They were very helpful when I was thinking about transferring some shares to my niece at Christmas time (hence the example).

Good luck!

 

[kaveman]

sounds like the Over-the-Counter available in the US

 

[Mouse]

I asked the ASX and this is what they had to say

Start quote ...

Thank you for your email.

The situation you refer to about making regular share purchases directly from a company does not occur with companies listed on the Australian Stock Exchange. Once a company has made its Initial Public Offering of share (the "float") those shares can only be acquired through the services of a stockbroker.

The only exception to this situation is the case of a Share Purchase Plan (SPP). A SPP allows shareholders to purchase a preset amount of shares in a company without going through a broker. A SPP can generally only occur once a year and can only issue amounts to shareholders of a value no greater than $5000. For amounts larger than this a Product Disclosure Statement and shareholder approval would generally need to be obtained.

I hope that clears up the questions.

Kind regards
Tanya Adrych
Customer Service
Australian Stock Exchange Limited
Exchange Centre

End quote

cheers
Mouse

 

[ob1kenobi]

Thanks for that Mouse. I thought there was something odd in the process as you described it. Regarding SPP, I'm familiar with them as QGC has had two of them from memory.

 

[Mouse]

Hi Ob1,

It's a shame Australia doesn't have them, I think it's a good system for those on a low income who want to get involved with the stock market without paying a lot of fees. But I guess managed funds serve the same purpose.

As for SPP's I got in on the recent Biota one, paid .76 for them and sold some of them at $1.88 so I'm happy.

cheers
Mouse