How to sell shares you didn't buy

A family member asked me the other day how he could sell his Insurance Australia Group (IAG) shares.

Now he's not much of a share trader so he doesn't have a trading account and he didn't even buy these shares himself - he acquired them as part of the NRMA demutualisation many moons ago.

I thought this was an interesting challenge - how to sell shares you didn't actually buy. These are referred to as "issuer-sponsored shares".

This essentially means that you received the shares directly from the issuer rather than buying them on the Australian Securities Exchange (ASX). You might have received these shares as a result of a privatisation, a demutualisation or as part of a salary package.

IAG is a prime example of an issuer-sponsored share because many people acquired them because they were NRMA members at the time of demutualisation. Other examples include AMP, Commonwealth Bank, NIB, Wesfarmers, Woolworths and Telstra.

It's important to think it through and make an informed decision before going ahead with the sale. Do your homework on the company and what's happening in the market to get a true idea of whether it is a good time to sell those particular shares.

Something else to consider is that you will probably be hit with capital gains tax (CGT). The company should be able to give you a "cost base" so you can get an idea of how much your gain is likely to be.

OK, so you've done all your homework and really want to get rid of your shares. You can open a trading account but that seems like a bit of a waste of time if you have no plans to trade regularly and just want to do a one-off sale.

Many brokers offer a one-off sales service, including CommSec, CMC Markets, netwealth and Westpac to name a few. You'll generally need to complete a form and email or fax it back to the broker.

The fees vary between providers. CommSec, for example, charges $66 per trade up to $10,000 or 0.66% of the value of the trade if greater than $10,000 while Westpac's fee is $55.95 or 0.25% (whichever is greater) for sales completed via fax or mail.

The fee is generally deducted from the proceeds of the trade and a cheque will be sent to you about three days after the trade.

To be able to sell your shares you will need to know your shareholder reference number (SRN). For issuer-sponsored shares this will begin with the letter "I" and you should be able to find this on your holding or dividend statement.

If you can't find your SRN you can arrange for a replacement statement to be sent to you.

Unfortunately, you can't get it over the phone or internet for security reasons.

Get in touch with the company you have the shares in and it will refer you to the appropriate share registry provider to request a copy of your statement showing your SRN. Make sure the share registry has your correct details.

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