RE: Very undervalued6 Apr 2018 15:27
Hi Yanis, This is a snippet from a ************* article I've dug out, dated 27 June 2016
Anyone holding 3% or more of the total issued shares in a company must disclose that position within two trading days of crossing that threshold, providing the company is incorporated in the UK, and that will come via a TR1 notification in RNS form. Subsequently for each 1% threshold crossed (up or down � although no further disclosure is required once a holding drops below 3%) a further TR1 notification is required.
There are several exceptions to this rule, with one of the most common being that for non-UK incorporated companies the notifiable threshold if 5%, with subsequent notifications required at 10, 15, 20, 30, 50 and 75%, and disclosure of any change must be within four days.
Other exceptions include fund managers, and under EU rules they can disclose at 5% and 10%, and then each additional 1% thereafter. Market makers can also hold up to 10% without disclosing their position, as long as they don�t use that holding to interfere in the running of the company or to influence the direction it takes.
You would think that with all this in place it should be fairly transparent as to the larger holders in any UK listed company, and also when they make changes to those holdings by buying or selling, and that the market would quickly become aware of this.
The reality though would seem to be somewhat different, and the onus is on the shareholder to report a notifiable holding to the company, which then issues an RNS, and there are numerous cases where this has been abused or even totally ignored.
I�ve been watching for the markets for a good few years now and have seen plenty of occasions where institutional investors have reduced holdings by large amounts, crossing multiple thresholds, without any sort of notification along the way, and at times have been selling for months without informing the market � this seems more prevalent than when these IIs are buying.
On other occasions some IIs have completely sold out of a company without actually notifying the market at all � one example that springs to mind was Excite Energy (XEL) - registered in the British Virgin Islands - back in 2011 where some of the larger holders exited months before it eventually came to light that they had sold.There seems to be little or no action taken against those who fail to make the proper TR1 disclosures, and I think that some private investors are jumping onto the bandwagon in some of the tiny AIM listed companies where you don�t need to invest a fortune to obtain 3% or more of the shares in issue.
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