Letter of Common Stock Ownership

suzyq2909

Hi, I was gifted some shares in a company part-owned by my brother, the idea being that the company was planning to go public and I could then sell my shares if I wanted. I have a Letter of Common Stock Ownership, in my name and signed by the CEO confirming “ownership interest” in the company. It says the shares are in book-entry format and no physical certificates have been issued pending the public listing.

My brother is no longer involved in the company and they haven’t yet gone public. Can I do anything with the shares? Is this piece of paper actually worth anything?

Thanks in advance

Linton

You could perhaps sell the shares privately, probably to an existing shareholder. The price would be up to negotiation. Or if the company was taken over you would be due a % of the proceds.

suzyq2909

Thank you that’s helpful. I was contemplating throwing the document away thinking it was worthless. Maybe I’ll hang on to it for a while and see what happens

marlot

I'd check up on the company on companies house from time to time.

Are you due some dividends?

suzyq2909

No idea whether I’m owed dividends and no idea how to find out. It’s a US company. Any advice welcome please?

Malthusian

Is the CEO who signed the paper still at the company? I would contact him and say you want to sell the shares now that your brother is no longer involved. If he isn't then contact whoever is now the CEO.

Has your brother sold his shares? If so there's no particular reason you couldn't do the same.

Expect to get much less for them than a later IPO or business sale would raise - there is likely to be almost no market for them. If the IPO eventually arrives a few months later and it turns out that you could have got a lot more by holding on, that will be normal.

It would be wise to assume the shares are worthless and treat any return as a bonus.

It was a somewhat odd thing for your brother to do, it would have caused you less hassle to keep the shares to himself and gift you any proceeds if they were ever sold. (Potentially not as tax-efficient, but I don't think the tax-efficiency is a good enough reason to saddle a sibling with being a powerless minority shareholder, and raise their hopes of a windfall that may never come.)

suzyq2909

Yes it’s the same CEO. The parting of ways with my brother & the company wasn’t particularly amicable & without going into details this was his way of repaying a “loan” from me when he didn’t have the cash. The supposed IPO was always .... imminent.... but still hasn’t materialised.

Regarding dividends mentioned by Marlot is this something I could pursue?

Thank you

Thrugelmir

As a shareholder. At the very least you should be sent a copy of the annual accounts. Early stage company seeking an IPO is unlikely to be paying a dividend.