Im so torn about this issue.  6 months or a year seems like a fair date, however I always believe that when a person purchased shares in a company they did so with hard earned money and therefore wouldn't be so inclined to see them disappear. 

I just keep picturing some investor who bought shares a year or so ago and the lost interest in SL.  All of a sudden they remember they had money in the SL exchanges and check their account.  Once they parse through all the information and figure out WSE Companies which went to other SL exchanges and GIIF to VSIF so on they finally figure out that thier shares were taken and confiscated.  I don't know about you, but it would really upset me.

I don't necessarily agree with the practice.  It seems to have become a common business practice for some SL companies and it just feels to me like we are deleting someone's ownership because they don't log in.  It's just not a valid enough reason to remove someones equity to me.

Last edited by AshleighWade (2009-01-07 11:04:03)

i totally agree with Ashleigh

I wouldn't like to be in your shoes Mart, since you're dealing with a tricky issue. A few times we've been asked to come up with a policy about inactive shareholders.

We're all for protecting individual ownership of even the smallest shareholder. On the other side, we have an issue with inactive shareholders. They do not go to shareholder meetings, they do not vote, give input, ask questions and they don't trade.

The fact they don't trade is bad for almost everyone. The exchange gets no commissions on those shares, liquidity is reduced, trading for a company may even grind to an halt.

While we have no policies on that issue yet, we believe that listed companies should not be allowed to have their own policies about inactive shareholders. Nothing personal, I reckon your good faith, however there is a big conflict of interests here.

A possible solution may be to allow the company to claim back those shares pursuant to a policy set forth by the exchange. Then, should the investor come back sometimes (in 1, 10 or 100 years) the company should give back to him the very same amount of shares formerly claimed back.

The exchange would be the regulatory body overseeing the process.

This may actually work, provided the exchange is willing to take up this additional task. There are some situations where this won't work. If you claim back a fair amount of shares, sell them and then all those investors come back, you may not be in a position to give them back the shares since by doing that your stake in the company would drop below 51% (that would be a problem on our exchange).

Just some food for thought.

Last edited by SamanthaGoldflake (2009-01-07 13:03:21)

SamanthaGoldflake wrote:

I wouldn't like to be in your shoes Mart, since you're dealing with a tricky issue. A few times we've been asked to come up with a policy about inactive shareholders.

We're all for protecting individual ownership of even the smallest shareholder. On the other side, we have an issue with inactive shareholders. They do not go to shareholder meetings, they do not vote, give input, ask questions and they don't trade.

The fact they don't trade is bad for almost everyone. The exchange gets no commissions on those shares, liquidity is reduced, trading for a company may even grind to an halt.

While we have no policies on that issue yet, we believe that listed companies should not be allowed to have their own policies about inactive shareholders. Nothing personal, I reckon your good faith, however there is a big conflict of interests here.

A possible solution may be to allow the company to claim back those shares pursuant to a policy set forth by the exchange. Then, should the investor come back sometimes (in 1, 10 or 100 years) the company should give back to him the very same amount of shares formerly claimed back.

The exchange would be the regulatory body overseeing the process.

This may actually work, provided the exchange is willing to take up this additional task. There are some situations where this won't work. If you claim back a fair amount of shares, sell them and then all those investors come back, you may not be in a position to give them back the shares since by doing that your stake in the company would drop below 51% (that would be a problem on our exchange).

Just some food for thought.

I like your like of thinking on this Sam.  Very well thought out.  This is the best line of thinking I've seen on this so far.

Last edited by AshleighWade (2009-01-07 13:27:20)

i would certainly suggest that cancelling someones shares due to them not logging on (or for any other reason for that matter without their permission) is a bad idea.  especially as this idea was not around when they acquired the shares.

at the worst, the shares should be acquired from the dormant person by the company and cash placed in their ISE account.  under this method, the dormant holder would then forego any future dividends and any potential gains from future share price rises, but would at least be compensated for their holding at current market values.

alternatively, find someone who would be willing to somehow "insure" dormant holder accounts that they would have access to their holdings should they decide to return to the ISE / SL.

well
i don't like the idea of reclaiming shares to an company,
but samantha's idea sounds like the best of the worst.

but there is just one thing to quote mart;
Dividend to those shares will not be paid after the period mentioned in the policy of ISE.

so you will take the shares in your account after a year, in this year you paid divident to the investor, but when he comes back after more than a year you will give his shares back but not the divident he missed
in the period between the year off and reclaming the shares?

i understand that abandon accouns are harder tho deal with but not a real pain in the ass,
cause how many people are realy abandoning there account? 1 in 100 accounts?
most people cash out first and then abandon there account.
so just don't! and leave those abandon accounts abanded.

best thing said in this tread so far was from ashleigh and to quote her;
However would I be LESS inclined to invest in a company where I know that a clock is ticking and I must remain active? YES - because I thought the idea of a fund is a TRUST SITUATION  where I can invest and NOT HAVE TO THINK  about my investment but leave it to "professionals", regardless of a timeframe and FEAR that I must log in.

Dice

Sometimes someone needs to be first.
Nobody knows where SL life is in 5 years, and the stocks at this exchange.
Everything could be gone if an user login or not.
Also SL isn't RL, and a virtual stock exchange isn't a real stock exchange and virtual shares aren't real shares. Rules in the virtual world are different then in real life.
This isn't to make people scared, it's just the way it is.

I love to manager VSIF. I do my best to do this on a "good" way, like this stock exchange do and a lot of companies on this stock exchange.

If people buy shares a long time ago and never come back, isn't that a pity then?
These virtual assets will belong to a 'death' account then.
If the shares could be sold then the stock exchange makes profit at in, the company too and also 'active' virtual shareholders.
Like I said if someone after some years claim back his shares, he gets them back.

Cocky,  I got 2 options I would like the possibilities of how possible they are.

- Can it be possible at ISE to set shares back to the account of the CEO of the company if people didn't login for a year, implanted from of 01- July - 2009?

- Is it possible that shares will be sold to the marked automatically after a year/ 6 months if people didn't login? So people get the money from the shares. And the shares are sold to active users and the stock exchange get commissions.
I Do prefer this action far more than option 1. The stock exchange can then decide what to do with the account of the person.

Can you come with a stock exchange rule / pollicy about this?
Something written about this. How long holdings will be preserved? Is it a life time or a certain period or etc. If nothing is written down it seems everything could be possible.

Last edited by martlupino (2009-01-08 15:35:39)

percyfotherington wrote:

to be honest, this is starting on the slippery slope to confiscation of shares outright.  we are merely putting a time limit now, but what if the next idea is to shorten that time limit?

martlupino wrote:

Also SL isn't RL, and a virtual stock exchange isn't a real stock exchange and virtual shares aren't real shares.

yes, but real US$ bought L$ which then bought the virtual shares.  there is a direct link back to US$ here.  the shares have US$ value.

martlupino wrote:

Rules in the virtual world are different then in real life.
This isn't to make people scared, it's just the way it is.

as Luke Connell exploited very well.  you may be 100% above board, but what about the next person?  or the next after that?

martlupino wrote:

If people buy shares a long time ago and never come back, isn't that a pity then?
These virtual assets will belong to a 'death' account then.

this, surely, is their right.  they can sit there and collect dividends.  shares are not bought with the express stipulation that they must be traded.

martlupino wrote:

If the shares could be sold then the stock exchange makes profit at in, the company too and also 'active' virtual shareholders.

seems that the one person not listed here is the original owner.

martlupino wrote:

Like I said if someone after some years claim back his shares, he gets them back.

assuming you are still around.

you seem to be doing a fairly good job of issuing new shares at the drop of a hat anyway.  as a percentage of shares in issue, these dormant shares are going to become quite small.

i suggest we just let them be.

Hi Percy,

I just want the discussion going on.
To get discussions for this subject.
I don't say I will implement them (if I can), I wanna know the possibilities and which problems, risks there could rise.

By the way: Your company got a lot of more shares then mine. I don't see what your problem is about that I issue more shares.In fact I did invest in your company, so your customer attitude could improve. After all were real people
You can get your 15,000 TFIG shares back if you want. (made possible becouse of the expansion;))

Last edited by martlupino (2009-01-08 15:16:47)

Coming back to this.... base on the input I think we can safely agree:

PRO SHAREHOLDER NOTIONS:

- The majority of comments support the notion that regardless of time frame or other factors when a person buys shares (equity) in a company they are entitled to that equity with full right, and it should not be up to the CEOs (or boards) to determine who or how or when these shares are removed. 

- To protect shareholder interests any plan, practice or policy on "dead accounts" should be conceptualized and administered by the listing exchange.  This will ensure that a company is not acting in conflict of interest.  This will also ensure any shares removed are wiped by the exchange, and in the event the "dead individual" resurfaces the exchange can reinstate those shares in full.  Dividends for the dead accounts are something we need to work through.   

- Any plan, practice or policy on "dead accounts" should be communicated clearly so the shareholders are aware of the plan, practice or policy before they invest.  Some have indicated they feel it should not be enforced retroactively.

PRO COMPANY NOTIONS:

- Any plan, practice or policy on "dead accounts" will help to promote an active shareholder base.  Because we all know that SL is not RL, we know people just say "#$*% it!  I'm leaving SL" and they never look back.  The result is a dead shareholder base that is not really useful and is a sinkhole for dividends.  Also identified as a problem are Alts of those "dead accounts" and Alts of the scandalous that are dead for obvious reasons.

- Any plan, practice or policy on "dead accounts" would ensure that only the active shareholder base is receiving dividends, and further those dividends will not just sit but will go back into the exchange and, more broadly, the SL economy.

- Any plan, practice or policy on "dead accounts" could help foster more participation by individual shareholders.

---------------------------------------------------------------------------------------------------------------------------------

Caveats:

I am sure you all can identify more, but initially my gut response is that this will potentially cause havoc on a companies equity structure.  My thought lies with a smaller top ten holder, say someone who held 2%.  A larger holder is determined to be a "dead account" and, low and behold, the 2%er is now a say a 15%er and has more leverage over company decisions.  But then, the corpse arises and the exchange reinstates thier "dead account" and 15% is now 2% again.  How do we deal with any hard feelings that might arise there.  Perhaps it won't be an issue if the policy is clear to all parties, but if we don't raise these questions now it could be a bumpy road.

The other obvious issue that arises is the newbie who thinks "SL is a lot like RL" and they just want to park some lindens in a good fund and then "set it and forget it".  They get busy and don't log in, but the whole time they are thinking about their accounts, dividends, etc.  They then log in later to find their funds are now in escrow.  That can't be pleasant.

What other issues do we see here?

Last edited by AshleighWade (2009-01-08 17:25:08)

In my opinion the only time this should be done is if the ISE account is destoryed due to avatar no longer existing in SL, to me that is the only true sign an account has been abandoned.

Actually that brings up the possibility of having abandoned accounts that are actually active on ISE. Perhaps we need to allow an email to be attached to an account so accounts can continue under a new avatar if previous avatar no longer exists (not completely sure how this would work).

The only fair way for something like this to be conducted would be to have it done exchange wide and implemented by Cocky with the assets being sold and the proceeds added to the fraud fund perhaps.  However unless this is something scriptable it is probably unlikely to happen as I doubt Cocky has the time to check through almost 2000 accounts to see whether they still exist in SL.

Itchy brings up great points.  What should our critieria be?  Unless an AVI is gone from SL search should they should be considered a valid account?  Or Logins to ISE and/or SL?

The email idea is top notch.  It would help out in situations like DD's where she had randoms contacting her regarding shares under another Avi which she had no way to verify.  Account succession should be considered just as much, if not more than, account neglect. 

I had another thought.  If we are going to trend the SL Markets into more of a RL market situation, with the idea that regulation is real possibility in the future, then we should be mindful of how the policies we set now will reflect later in that scenario.  In that context is this still a valid idea?

To me the "why" that is sought here is about dividends, and paying a company's hard earned money consistently into a black hole, to someone who has no interest in participating in our little world any longer.  For whatever reason they have written everything off as a loss and left for good.  The other blackhole would be alts of someone like Allen, Tizzy, Juran, Merlin that will never be revisited.  This money will sit and won't go back into the exchange/market/economy.

My thoughts have developed to this -

If something like this were to hold weight, the only way it should be done is by requiring the company to directly buy back the shares from the respective shareholder at a premium rate and per *clearly communicated* policy set by the exchange as regulatory body.  This would mean a one time expense for the company, but further dividends will not go into sinkhole for all eternity. 

If it is a larger holder that disappears then so be it, a larger expense to buy back the shares.  I feel that its a duty of the CEO to get to know their top shareholders just as much as its a duty for the top shareholders to know their CEOs. 

I just can't get around the fact that a shareholder has an undeniable right to their purchase/equity regardless of timeframe or circumstance.  I can't justify "taking" or "escrowing" shares because of lack of attentiveness.  It goes against everything I believe in as far as shareholder equity.  I could, however, perhaps see where some sort of premium purchase scheme might ensure that a company has an active shareholder base and could be a viable solution as long as its communicated, announced and regulated clearly and cleanly.  Perhaps that might be something to explore.  Otherwise, I think we've hit a dead end.  You just can't tinker with someone elses money.

Last edited by AshleighWade (2009-01-09 10:24:37)