William recently received a letter in the mail which appeared to be a very good offer for shares he owns in a publicly listed company.

William bought these shares when they were first listed in the 1990s, and quietly monitored the share price as they slowly rose over the years. While William is generally happy with the share price, the offer was about 20 or 30 per cent higher than its currently listed value, and so he wondered whether he should accept the offer.

However, William found the catch in the offer when he read the small print on the back of the letter. He discovered that payment would be made in instalments each year over the next ten years. This means that William would effectively be lending his money interest free and would miss out on any dividends for ten years.

In the last few months there have been several unsolicited share offers. On face value, these offers seem very good, but in reality, when taking into account all the conditions, the offers are nothing like they first appear.

The Securities Commission is aware of these offers. The Commission notes on its website that it is not an offence to make such offers and it is not illegal to buy shares less than their market price. However, the Commission has decided that these offers are misleading or deceptive or likely to mislead or deceive, which is illegal. In some cases the Commission has subsequently ordered those making these offers to send a correcting statement to everyone who received the offer.

It is important that if you receive an offer for your shares that you read the letter and the small print carefully. It is also a good idea to seek sound professional financial advice before deciding whether or not to accept the offer.