Up until the end of March I owned 5,452 shares in gardening company William Sinclair Holdings with the share certificate in the custody of my broker. For several months, the total value of the shareholding had been steady at around £520.
However, when I checked it at the start of February I found that the value had plummeted to £0. I called my broker who told me that William Sinclair had delisted from the London Stock Exchange’s Alternative Investment Market (Aim) on 1 February with no prior notice. They also told me that the company was in administration.
I contacted the administrators who told me in no uncertain terms that shareholders would get nothing. In the light of this shabby treatment, do you think anything could be done so that I can get some compensation?
When a company goes into administration, its debts are higher than its assets and it can no longer trade viably as a business.
Administrators are called in to try to get the best value they can for the assets and to repay creditors. Also, the costs of winding a company up, which can be considerable, have to be met.
Only if there is any money left after that will shareholders see any return. However, this is highly unlikely.
In terms of redress, you have to consider from whom this might be paid: the company has gone bust so there is no money to be able to pay out; the directors have limited liabilities; and there is no government scheme to protect investors against individual investments in companies such as this. Share investors sign up to the risk and reward relationship that you could profit, but could also lose money.
The risk of total loss is much reduced by investing in shares in companies listed on the London Stock Exchange’s main market, such as shares in companies in the FTSE 100 Index of the UK’s biggest companies, rather than shares in Aim companies.