Be wary of off-market offers for your shares

The Australian Securities and Investments Commission has warned small shareholders to be wary of unsolicited offers to buy their holdings.

A number of operators flood small investors with mailed offers to buy their shares in public companies – usually at a price well below the market. ASIC urges shareholders to fully investigate these offers.

While the practice is legal investors should check out the real value of their shares and whether it's wise to sell or hold. Try to find out why the offer is being made. Know your shares' value now and get an idea of their future prospects. Something may be about to happen to the shares that the investor doesn't know about.

Some of these offers don't give investors the same protection that they would get if selling their shares through a broker, Mr Kell said. While investors hold certain basic rights, when and if things go wrong, they would have to bear the costs themselves. There could be unnecessary fees and charges if the investor elects to sell shares without getting independent advice from a licensed stockbroker or financial adviser.