RCG Holdings Ltd

w00519772

I bought a few shares in RCG Holdings Ltd about ten years ago using my HSBC Invest Direct account. The company ceased trading on the AIM market last year as described here: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12009144.html

Why did the company cease trading on AIM?

I have a share certificate from the Hong Kong Share Register, which says: "This is to certify that the undermentioned person(s) is/are the registered holder(s) of fully paid ordinary shares of nominal value of $0.01 per share".

Does that mean that each share is worth 1 cent each? How can I sell these shares. I am thinking about opening a Hargreaves and Landsdown stocks and shares ISA, however they said that they do not cover Hong Kong shares. They suggested investigating the 'Purpose Share Register', however I cannot find any information on this.

Thrugelmir

The link below will answer your questions.

http://www.morningstar.co.uk/uk/News/NewsFeedItem.aspx?id=129847598815916

bowlhead99

As per the link, they dropped the AIM listing because it cost too much and made them do too much compliance work when most of their investors were happy dealing on the Hong Kong stock exchange.

The 'nominal value' printed on a share certificate is not really supposed to be anything close to the value that someone would pay to buy your shares - after all, the perceived value of a share can change several times a second depending on supply and demand in the market and the company's performance. The nominal value and share class is just to help you track exactly what ownership share of the company you have, if the share structure changes over time.

Since your share certificate was printed, the 1 cent (Hong Kong Dollar) shares - which, after years of poor performance, were hardly worth anything each - were consolidated together to reduce the total number of shares in issue and make the price of each of them a bit more meaningful. Four old one-cent shares became one new consolidated share with a nominal value of four cents each. So basically after that change, if your certificate says you had 2000 old shares you really only have 500 of the new ones which are trading on the HK exchange today. There are in total about 1.5 billion new consolidated shares in issue, so each share is not a very big stake in the company. In the last week or so they have been trading on the HK exchange in the 25-30 cent range.

So as a worked example lets say you have a share certificate for 2000 x HK$0.01 shares, perhaps you paid a pound each for them in early 2010. After the consolidation you could ask for a fresh certificate for 500 x HK$0.04 shares. Optimistically you could sell them for HKD0.275 each (closing midprice Monday was HKD0.285). So altogether they would be worth 137.5 Hong Kong Dollars. Very roughly there are 12 HKD to the pound so the shares would be worth about GBP 11.5. Most brokers that deal on the HK exchange would charge at least that much of a transaction fee to do the trade.

An example of a broker that offers HK listed shares inside an ISA is TD Direct Investing, I use them; they offer more markets for shares than HL and have lower platform fees for funds. However, you can't just put shares into an ISA as it's against HMRC rules. You would have to sell the shares, use the cash to subscribe to an ISA, then use the cash to buy back the shares inside the ISA.

TD Direct are an example of a broker / platform provider who could arrange that for you, but depending how much you paid for the shares (100p, 50p or 5p) you might not have a meaningful amount of value once the transaction fees are taken into account.

Pincher

Let me guess what happened.

HSBC Invest Direct was keeping the RCG shares in a nominee account for you while it was listed on AIM, with no certificate, but since it was de-listed, they can no longer do so.

So, they sent you a secure e-mail within the Invest Direct account, which you didn't read, asking you what you want to do. Having no response from you, they asked the Registrar in Hong Kong to issue a share certificate and send it to you, which cost more than the shares are worth to do.

As it costs £12.90 dealing charge to sell the shares while it was still on AIM, I would have just asked Invest Direct to give it to charity, and claim CGT lost for difference from initial cost. Now it's more hassle than it's worth to do anything with it. To claim capital loss, you need to show disposal, not "I threw it into the bin".

Pray that the share price recovers, and leave it in a folder.