SHARE ALLOTMENTS CRITICISED

Press, Volume CII, Issue 30233, 11 September 1963, Page 19

SHARE ALLOTMENTS CRITICISED

The present system of handling new share issues been criticised by a correspondent in a letter to the editor of “The Press" signed “Disgruntled Applicant." The correspondent says he feels the subject is important at the present time when more and more people are becoming interested in share dealing. He writes: “The recent handling of new issues of shares which have been offered for public subscription show a total dis-

regard for the main principles of new issue procedure, and also complete indifference to the public who take the time and trouble to apply for shares.

“If the stock exchanges of New Zealand wish to encourage people to take an interest in share dealing they should lay down rules for handling new issues and insist that companies adhere to these rules. “An announcement should be made as soon as possible after the lists close stating (a) the number of applications received; (b) total number of shares applied for; (c) complete allotment basis; (d) date allotments will be posted. All allotments should be posted at the same time, it is unfair to have some applicants receiving allotments before others. A separate cheque should be attached to every application, if no allotment is made the applicant’s ’ own cheque can then be returned without being cashed. “No matter how large the over-subscription, or how many applications are received, the company should ensure that all applications are dealt with swiftly and fairly, and possible delay should be announced in the press. “I recently applied for shares in a new issue which has been handled so badly as to be laughable. My application went in on July 30. The attached cheque was cashed a few days later by the company. Forty-two days later I have received no allotment, my cash has remained with the company all this time. Allotments have been made to other persons in Christchurch, some applicants as myself are still waiting. I would not support another new issue until some assurance is forthcoming that it will be properly handled.

“One further point is that if companies wish to confine allotments to one particular district they should make a local placing of the shares and not waste people’s time by offering shares to the public which they have no intention of alloting. This is done, I imagine, as an insurance against local support not being forthcoming.”