Media reports yesterday that Melbourne share sharks, Share Express, were back offering Telstra shareholders below market prices for their holdings made a timely backdrop for a move from Canberra to make these sorts of raids much harder.
Share Express offered $2.16 for Telstra shares when the market price was $3.37 at the close yesterday.
Other outfits, mainly in Melbourne and the Gold Coast (David Tweed is a well known promoter), have made similar lowball offers, with seeming impunity, in the past few years.
Now the Minister for Corporate Law, Chris Bowen yesterday released proposals designed to prevent these predatory share offers being made to vulnerable and unsuspecting shareholders.
In a statement, he said the reforms will also reduce the compliance costs for business by reducing the amount of resources needed to respond to requests for copies of member registers.
The Access to Registers and Related Issues proposals paper outlines planned changes to the law, including the requirement that companies only provide access to their share registers when requested for a "proper purpose".
"The Government is moving to stamp out the practice of scam artists using information obtained from share registers to target and rip-off unsuspecting shareholders," Mr Bowen said.
"The proposed changes will balance the needs of those seeking legitimate access to registers with the rights of those whose personal information is contained in the register."
The paper outlines proposals for reform developed from submissions in response to the options paper, Access to Share Registers and the Regulation of Unsolicited Off-market Offers.
Under the Government’s proposals, companies will be authorised to refuse requests for access to their share registers unless the request is made for a "proper purpose".
Any person seeking a copy of a company’s share register would be required to specify in their request the purpose for which the information will be used.
A non-exhaustive list of "improper purposes" will be specified in the Corporations Regulations 2001 and will specifically include the use of a copy of the register for the purpose of making an unsolicited share offer to members of a listed company. Genuine takeover bids will be exempt from the access regime.
The Australian Securities and Investments Commission (ASIC) will also produce guidance material on what purposes can generally be considered proper.
New offences will be established that relate to issues such as improper use of register information and false or misleading applications.
The proper purpose test will not apply to applications to view a share register.
The proposals paper released also outlines proposals to:
set down a three-tiered fee structure for obtaining access to a company’s register, with the fee chargeable to be based on the number of members contained in the register;
require a company to provide an electronic copy of its register in a format prescribed in the Corporations Regulations; and
reduce the cost burden on companies by allowing a register be viewed on a computer instead of the current obligation of printing a hard copy for applicants who only wish to view the register.
"These proposed technical changes will allow the law to keep pace with changes in technology, while reducing the compliance burden on businesses," Mr Bowen said.
Computershare should be pleased, along with lots of major companies who have felt they had to release their register details to some of these sharks because there was no way they could say no legitimately.
Many companies tried putting up the cost of obtaining registers, but this damaged some shareholders who sought to agitate ahead of board meetings on questions of corporate governance and the performance of boards.
Many of the share sharks make so much money that they gladly part with thousands of dollars for a major company share register.
