[Question] How to find shareholder infomation?

[bobsuncle]

Hello everyone,

I have searched the forums and the internet and been unable to come up with the answer to the following:

I am in the process of investing in a business. I have been told that I will buy X number of shares which equates to X percentage.

What I would like to do is confirm how many shares have been issued by the company. Is there any official way to find shareholder information on a company instead of just taking their word on it?

Thanks for any help,
Bobsuncle

[Andromeda]

Hi Bob

Short of a court order,no. I'll assume no company secretary has been appointed, that being the case then:
- the directors issue shares, so then they should provide you with a subscription agreement (unless you are buying from an existing shareholder)
- the directors are the ones who have to maintain the register of shareholders. The Act actually makes provision for a huge fine if it is not maintained. So you could consult that.
- the most recent annual financial statements will disclose the shareholder at that year end, either in the general information section, the director's report, or the note on share capital in the notes section.

If none of them are able to provide the information that you seek, and you have not been provided with a subscription agreement, then you should not be investing there.

[bobsuncle]

Hi Bob

Short of a court order,no. I'll assume no company secretary has been appointed, that being the case then:
- the directors issue shares, so then they should provide you with a subscription agreement (unless you are buying from an existing shareholder)
- the directors are the ones who have to maintain the register of shareholders. The Act actually makes provision for a huge fine if it is not maintained. So you could consult that.
- the most recent annual financial statements will disclose the shareholder at that year end, either in the general information section, the director's report, or the note on share capital in the notes section.

If none of them are able to provide the information that you seek, and you have not been provided with a subscription agreement, then you should not be investing there.

Thank you for your help,

Is the shareholders agreement the same as the subscription agreement?

[Andromeda]

Actually no. A subscription agreement is mainly two-way guarantee between a company and a subscriber or investor. The company agrees to sell a certain number of shares at a specific price, and in return, the subscriber promises to buy the shares at the specific price. The agreement is usually in a form that is an invitation that is extended to all shareholders.

The shareholders agreement is an agreement that seeks to regulate the relationship between shareholders and between shareholders and the company. These are largely redundant because i they are contrary to the Act, the Memorandum of Incorporation should be customised to embody the variations.

If you are not comfortable with the deal, get a practitioner to assist you. Preferably a registered auditor.

[Bryson]

hey there i khnow you did a good job and i agree with Andromeda if they can provide the information then go for it if not then leave it dont invest there

[bobsuncle]

Thank you both very much for your advice.

To be honest, we know the people well and because my wife is a family friend they have done so much to allow us to be involved (We're only buying 10% and they don't need my money). I highly doubt that they would be trying to shaft us, but I do want to do my due diligence just to make sure there is nothing untoward.

[jameshouston135]

Well These are major sites which can help you to figure out major shareholder information?
EDGAR
sec_gov

Mergents
lib.umn_edu

LexisNexis
lib_umn_edu

[mark@suitegum.co.za]

Every single company in South Africa must have a memorandum of incorporation (MOI). In that document, you will see the number of shares authorised for issue by a company.

But not all authorised shares need be issued.

Every company is required to maintain a share register (securities register). This will give details of what share certificates are held by whom, and how many shares each shareholder owns. From that, you can work out the %ages held by each shareholder. The %s should add up to 100% of the ISSUED shares.

The balance of authorised versus issued shares is held by the company (in the treasury). They do not fall into the makeup of the 100%.

Now... Every single company in the country can be asked by any person in the country for a copy of his securities register. Failure to provide it within 7 days is a criminal offence. If a friendly request is not complied with, then complete a CoR24. If you are not a person with a beneficial interest, then you will have to pay a fee, which I think is R100.

Ask yourself this... If someone looking for investment in his company does not give you free access to his securities register, do you want to invest in his company?