Getting financials on dark companies

[Graham Osborn]

Does anyone have suggestions on getting information on dark companies? I emailed the CEO of one recently and he said you had to (in their case) submit a written request to the Delaware Division of Corporations and sign an NDA. This is obviously a fairly burdensome process when - in most cases - I don't have any more data on the company than the stock price and the process could turn out to be just a huge waste of time. Of course if it was a local business or I knew the ecosystem I might be able to come up with enough scuttlebutt to imply that looking at the financials would be worthwhile. Even then, the other thing I'm not sure of is whether a dark company would be expected to keep audited or unaudited financials for internal use - I guess that would depend on the shareholder base.

 

Originally I thought if you bought a share and called the company they would just send you the financials but I'm no longer sure the process is that simple. Apparently the JOBS act has encouraged companies to get more cagey about what they share.  Just looking for others' experience.

[LC]

Paging Nate...

[Jurgis]

There was a thread on this already and Nate/oddball pretty much said that it varies and it could go from "info freely available to anyone on website" to yours "file papework, sign NDA, get crappy info maybe".

[Guest Schwab711]

There was a thread on this already and Nate/oddball pretty much said that it varies and it could go from "info freely available to anyone on website" to yours "file papework, sign NDA, get crappy info maybe".

 

This is the gist of it. You'd also need to know more info about the company (HQ location, # registered shareholders, ect) and even then it would still be case-by-case.

 

Generally, if a company is incorporated in one of the 24 adherents to the Model Business Corporation Act, you will probably be treated fairly. If they are in Delaware or Nevada, stick with larger companies. Otherwise, it's case-by-case (CA and NY tend to be friendlier, but it depends on what is important to you).

 

Here's the best overview I could find for your situation:

http://www.professorbainbridge.com/professorbainbridgecom/2016/04/should-close-corporations-have-a-duty-to-disclose-financial-information-to-their-shareholders.html

 

Basically, your company is probably being nice to you, given their rights. They could certainly ignore your request altogether if you are not registered on the shareholder roll.

 

I should add, you also need to be willing to defend whatever rights you may have.

[oddballstocks]

There was a thread on this already and Nate/oddball pretty much said that it varies and it could go from "info freely available to anyone on website" to yours "file papework, sign NDA, get crappy info maybe".

 

This is the gist of it. You'd also need to know more info about the company (HQ location, # registered shareholders, ect) and even then it would still be case-by-case.

 

Generally, if a company is incorporated in one of the 24 adherents to the Model Business Corporation Act, you will probably be treated fairly. If they are in Delaware or Nevada, stick with larger companies. Otherwise, it's case-by-case (CA and NY tend to be friendlier, but it depends on what is important to you).

 

Here's the best overview I could find for your situation:

http://www.professorbainbridge.com/professorbainbridgecom/2016/04/should-close-corporations-have-a-duty-to-disclose-financial-information-to-their-shareholders.html

 

Basically, your company is probably being nice to you, given their rights. They could certainly ignore your request altogether if you are not registered on the shareholder roll.

 

I should add, you also need to be willing to defend whatever rights you may have.

 

The *most* friendly state is Alabama.  I've come to learn that they are required to respond to ANY shareholder request for information within 10 days.  If they don't they owe you 10% of the value of your holding as a payment for not responding in a timely manner.

 

[LC]

Wow. Mental note: never incorporate in Alabama (or if I want to slush money out of a company I solely own, incorporate in Alabama)

[DooDiligence]

There was a thread on this already and Nate/oddball pretty much said that it varies and it could go from "info freely available to anyone on website" to yours "file papework, sign NDA, get crappy info maybe".

 

This is the gist of it. You'd also need to know more info about the company (HQ location, # registered shareholders, ect) and even then it would still be case-by-case.

 

Generally, if a company is incorporated in one of the 24 adherents to the Model Business Corporation Act, you will probably be treated fairly. If they are in Delaware or Nevada, stick with larger companies. Otherwise, it's case-by-case (CA and NY tend to be friendlier, but it depends on what is important to you).

 

Here's the best overview I could find for your situation:

http://www.professorbainbridge.com/professorbainbridgecom/2016/04/should-close-corporations-have-a-duty-to-disclose-financial-information-to-their-shareholders.html

 

Basically, your company is probably being nice to you, given their rights. They could certainly ignore your request altogether if you are not registered on the shareholder roll.

 

I should add, you also need to be willing to defend whatever rights you may have.

 

The *most* friendly state is Alabama.  I've come to learn that they are required to respond to ANY shareholder request for information within 10 days.  If they don't they owe you 10% of the value of your holding as a payment for not responding in a timely manner.

 

Should be some kind of weird arb in this huh?  :o

[Gregmal]

For some of them, you need to go to HQ with a ski mask and a gun.

 

All kidding aside, typically I've had success buying a few shares, then in direct order depending on results, email, call, send certified mail asking for information on company financials and the date of the AGM.

[bci23]

Anyone know the easiest way to get your shares from being held in "street name" to being a shareholder of record?

[KJP]

Wow. Mental note: never incorporate in Alabama (or if I want to slush money out of a company I solely own, incorporate in Alabama)

 

Alabama law isn't as draconian as has been suggested.  The Alabama corporation law says that the corporation is subject to a "penalty of an amount not to exceed 10%" of the value of the shareholder's shares.  Ala. Code § 10A-2-16.02©. [Full text quoted below.]  This language has been interpreted to give courts discretion on the amount of penalty to award.  See Sewell v. Bank of Wedowee, 918 F.2d 152, 154 (11th Cir. 1990) ("[T]he legislature intended that a penalty be mandated, but intended that the amount awarded be discretionary."). 

 

Alabama Code  § 10A-2-16.02©

© Any officer or agent who, or a corporation which, without reasonable cause, shall refuse to allow any shareholder, or his or her agent or attorney so to examine and make copies of and extracts from its books, papers, records of account, minutes and record of shareholders, for any proper purpose, shall be liable to the shareholder for a penalty of an amount not to exceed 10 percent of the value of the shares owned by the shareholder, in addition to any other damages or remedy afforded him or her by law. It shall be a defense to an action brought to collect the penalty specified in this section that the person suing therefor within the two years next preceding the demand has sold or offered for sale any list of shareholders of the corporation, or any other corporation or knowingly has aided or abetted any person in procuring any list of shareholders, or improperly has used any information secured through any prior examination of the books, papers, records of account, minutes or record of shareholders, or was not acting in good faith or for a proper purpose in making this demand.

[oddballstocks]

Anyone know the easiest way to get your shares from being held in "street name" to being a shareholder of record?

 

Call your broker and pay a $250 conversion fee.  You'll eventually be mailed the certificate.

[Guest Schwab711]

Anyone know the easiest way to get your shares from being held in "street name" to being a shareholder of record?

 

Fidelity will register you and send a certificate for $100. I heard IB does it for $25 but I haven't tried it yet.

[bizaro86]

Has anyone done one with IB? I tried with a special situation where you needed to have your shares registered in your name, and opened a ticket with them a year ago or so. They said they couldn't do it, and the opportunity passed, so I haven't asked again...