If you receive an unexpected letter offering to buy some of your shares, it pays to check the offer is legitimate and offering a fair price before acting, as often such offers attempt to buy your shares for less than they’re worth.

AUSCOAL Advisory Services Manager, Des Sutherland, said while it’s not illegal to make such offers, there are some requirements that must be followed.

‘An offer to purchase your shares shouldn’t mislead or deceive you to accept it and must include a written statement setting out the market value of the shares when the offer is made. You must also be given at least one month in which to accept the offer,’ Des said.

What to consider if you receive an offer to buy your shares

• Who is making the offer? If you’re not sure, call the company’s investor department to double check.
• Why is the offer being made? Read the company's announcements to check if anything is expected to happen to your shares.
• Check the market price of your shares and compare it with the price being offered.
• Is the buyer offering to pay for the shares in instalments over many years? If so, even if the offer price is higher than the current market value, by the time you receive all your money you may end up with less than if you sell your shares on the market.
• Remember, don’t be pressured to act. You don’t have to sell.

AUSCOAL Advisory Services advisers can help you work out if you should act on an offer. To make an appointment call toll free 1300 AUSCOAL (1300 287 262).