How can shares in a company just vanish?
Discussion
My OH invested £190 (not a lot I know) in a company called Livia's Health Foods Ltd via a platform called Seeders, which enables people to invest in young companies that show promise. Livia's products were already in Sainsbury's and other well known stores, so clearly they were doing something right. A total of £1.9million was raised via Seeders.
During the pandemic Livia's experienced difficulties and has now been bought out by a company called S-Ventures PLC.
Brief details here: https://www.marketwatch.com/story/s-ventures-buys-...
The update on Seeders is that shares bought on there are now worth zero. How is this possible? Surely if you own shares in a company and that company is bought out, you still own shares in that company? Maybe they'll be worth less than you paid, but they should still exist.
Apparently the company is currently in administration (though S-Ventures PLC intend to continue it). Does that have a bearing on the situation with existing shares?
Seeders has approached the founder of Livia's for an explanation but met a wall of silence so far. How do we find out where the £1.9million invested via Seeders went?
During the pandemic Livia's experienced difficulties and has now been bought out by a company called S-Ventures PLC.
Brief details here: https://www.marketwatch.com/story/s-ventures-buys-...
The update on Seeders is that shares bought on there are now worth zero. How is this possible? Surely if you own shares in a company and that company is bought out, you still own shares in that company? Maybe they'll be worth less than you paid, but they should still exist.
Apparently the company is currently in administration (though S-Ventures PLC intend to continue it). Does that have a bearing on the situation with existing shares?
Seeders has approached the founder of Livia's for an explanation but met a wall of silence so far. How do we find out where the £1.9million invested via Seeders went?
It all looks a bit hazy, but they seem to have been losing money hand over fist for at least a couple of years.
There's only so long any business can keep doing that, but surprising that there has been no comms to shareholders at all.
There's only so long any business can keep doing that, but surprising that there has been no comms to shareholders at all.
The shares haven't vanished. They still exist and your OH still owns them. It's just that they are worthless. The reason for that will be linked to the fact that the company is in administration. The value of shares is determined (amongst other things) by the demand for them and not many people are keen on buying shares in a company that appears about to die.
Administration is a legal process that creates a bit of breathing space for a company to restructure and avoid insolvency. The company still exists and so do the shares so has no bearing on them other than value. If they do manage to get themselves out of administration then you may well see the share value creep back up again. Though don't hold your breath.
Where did the £1.9m go? Running the business is my guess - Overheads, stock, marketing, R&D......
Welcome to the world of investment!
Administration is a legal process that creates a bit of breathing space for a company to restructure and avoid insolvency. The company still exists and so do the shares so has no bearing on them other than value. If they do manage to get themselves out of administration then you may well see the share value creep back up again. Though don't hold your breath.
Where did the £1.9m go? Running the business is my guess - Overheads, stock, marketing, R&D......
Welcome to the world of investment!
StevieBee said:
Welcome to the world of investment!
To be fair to Mitch’s OH these platforms push early stage investments at retail clients who probably don’t understand the risks they are taking, how to perform proper due diligence (including having any real grasp on whether the pre-money valuation is in any way realistic). They may think they’re investing, but more often than not it’s really a punt…StevieBee said:
The shares haven't vanished. They still exist and your OH still owns them. It's just that they are worthless...
... The company still exists and so do the shares so has no bearing on them other than value. If they do manage to get themselves out of administration then you may well see the share value creep back up again.
The way things are phrased it's as though the shares are gone and the company is now wholly owned by S-Ventures Plc, though I could be wrong.... The company still exists and so do the shares so has no bearing on them other than value. If they do manage to get themselves out of administration then you may well see the share value creep back up again.
LooneyTunes said:
To be fair to Mitch’s OH these platforms push early stage investments at retail clients who probably don’t understand the risks they are taking, how to perform proper due diligence (including having any real grasp on whether the pre-money valuation is in any way realistic). They may think they’re investing, but more often than not it’s really a punt…
I think she knew is was a punt, though it seemed like a reasonable one as the products were in some good retailers and my OH liked and bought plenty herself. That said, when she invested they'd already got almost £1.9m via Seeders and a total valuation close to £13m which I thought was bonkers, so I stayed well away.If what you’re saying is correct, the shares you held have been bought by S Ventures. However, you should have received an offer/notice regarding the shares. Are you sure this didn’t happen? The Companies Act/Articles/Shareholder Agreements set out your rights vis a vis a takeover.
As a result of the “takeover”, you should have received cash (maybe nil), or shares in S ventures.
Administration is probably a red herring if you owned shares in the company in administration - it only impacts/indicates value of the shares, not who owns them or what happens to them. The administrator has control over the assets of the company, not its shares.
Edit to add. I’ve just skim read the article, there was an offer of cash and shares in S Ventures. Total value £355k.
As a result of the “takeover”, you should have received cash (maybe nil), or shares in S ventures.
Administration is probably a red herring if you owned shares in the company in administration - it only impacts/indicates value of the shares, not who owns them or what happens to them. The administrator has control over the assets of the company, not its shares.
Edit to add. I’ve just skim read the article, there was an offer of cash and shares in S Ventures. Total value £355k.
Edited by Alpinestars on Saturday 19th February 07:45
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