Protect your shareholders’ stock and cash from escheatment, enhancing your investor relations
States in the U.S. have become increasingly greedy. They hire “contingent fee auditors” to sniff out stock and cash on transfer agents’ books which they CLAIM are property “abandoned” by shareholders – merely because those shareholders have not engaged in “activity” with the transfer agent in more than three years. The auditor is paid a percentage of the assets’ value by the state, the state rakes in millions of dollars which wind up in its general fund, and the hapless shareholder is left holding the bag – hoping he or she can eventually recover the “escheated” assets. Oh, and by the way, if the shares in question appreciated in value between the time the state received and cashed in the stock, and the shareholder realized what had happened, he or she only gets the amount of cash the state received in the stock sale.
Companies need to regularly educate their shareholders about the dangers of not communicating with the transfer agent (like voting proxies and cashing dividend checks), or changing their address without notifying the transfer agent. This education is easy for companies to do, and it is FREE. NOT doing it is arguably negligent at best, and at worst harmful to shareholders – especially the older and most vulnerable ones counting on those shares for retirement.
What to do? Have a prominently visible segment within the company’s Investor Relations web page citing the dangers of “inactivity,” or failing to update one’s address, and resultant escheatment. One educational tool we are aware of is Computershare’s internet link www.computershare.com/keepwhatsyours. If you want a no-cost, high-impact benefit to give your investors, escheatment education and prevention is a great choice.