Scrip tease ends as net finds lost companies

Bina Brown

The Australian

02 August 2003

The excitement of receiving share certificates from an aged relative for companies dating back decades can be quickly shattered when it’s discovered that the shares are worthless.

In the 20 years since the shares were bought there may have been a couple of takeovers, a reconstruction and a name change. The original shareholding can become so diluted it’s declared worthless and wiped from the registry records.

The gold embossed piece of paper bearing the name of the original company may as well be hung on the wall for all the worth it is.

Companies get taken over, privatised and put into administration all the time, although it does not always follow that the shares are worthless. It may be that the company merely changed its name or was involved in a scheme of arrangement where the investor now owns securities in some other entity which is now listed.

Even if the company concerned has been put into receivership or liquidation some proceeds may still be available and may result from future distributions from the receiver or liquidator.

The recovery process can take years. Most of the time shareholders are left wondering what happened to their company. In recent years it has been the collapse of companies such as HIH, GIO and Harris Scarfe which has left investors curious as to whether they will any return.

Keeping up with what is happening once a company is suspended from trading or delisted is extremely frustrating for many shareholders but it’s an issue which is at last being addressed.

Tony McLean, a former accountant and executive officer of the Australian Shareholders’ Association for almost a decade has constructed what he calls the company graveyard site, an internet site which contains the most comprehensive collection of information relative to suspended, delisted, merged and compulsorily acquired companies.

deListed.com.au follows the fortunes of companies in administration, receivership or liquidation or where class actions against directors or auditors are underway. It provides details for tax purposes of the consideration received by shareholders in mergers and takeovers. Shareholders are also given directions where to find unclaimed monies arising from compulsory acquisitions.

The free service that probably should have been provided years ago by the Australian Stock Exchange and the Australian Securities & Investments Commission: the two obvious bodies shareholders turn to when they want to find out about failed companies. The ASX provides a list of companies removed from its official list in the past six months but refers people to deListed.com.au for the reasons for all companies ever delisted from ASX. ASIC refers queries to the company share register.

“Some 200,000 shareholders have been affected by the failure of companies over the past couple of years and tens of thousands more by as yet unfinished company insolvencies stretching back to the late eighties,” says McLean.

“Many of these shareholders are understandably angry after reading in the media about the failure of their company or seeing a bland announcement that an administrator has been appointed.

“Rarely do company directors feel they owe an explanation to shareholders and administrators are of course answerable to creditors. The flow of information to shareholders then dries up completely,” he says.

deListed provides, for virtually every public listed entity merged or taken over since 1997, details of the consideration received by shareholders in those entities and in the case of companies compulsorily acquired, a note explaining where shareholders can access details of unclaimed monies.

Apart from curiosity, knowing what happened to a delisted company can be vital to claiming a capital. The Income Tax Assessment Act 1997 says a capital loss on shares in a failed company may be claimed if a liquidator has issued a declaration that there is no likelihood that the shareholders will receive any further distribution in the course of winding up the company.

deListed carries the required declarations (which can be downloaded) for many companies. He’s also lobbying to have the power to issue a declaration extended to an administrator, receiver and a provisional liquidator.

McLean’s ongoing research into companies, which extends to liaising with the firms running the major shareholder class actions, is inspired by the queries presented to him from shareholders.

“Many visitors to the site have made comments that demonstrate considerable shareholder disillusionment with the abrupt disappearance of their companies and the absence of information relative to companies in external administration,” says McLean.

“People like to know the progress of the company toward oblivion,” he says.

www.deListed.com.au