Shares of private company

[wanaberetiree]

I have some shares (certificates) from a company I worked for when it was an early stage tech startup. The company is still private, but doing well and plans to go IPO or sell in 1-2 years.

Question - what are pros and cons of depositing the shares to my broker (Fidelity claims to place private equities)? Any experience to share on this topic?

 

[Brat]

I have no personal experience with this issue, but who holds the shares now?

If it is you and you hold them in your safety deposit box there is a risk of loss. Eventually you will surrender them if they are bought out or IPO'd. I think that it would be easier to handle this if they were in the hands of the like of Fidelity.

However, if they stay private and want to sell them to, say your next door neighbor, how would Fidelity do that?

I suspect that they are a book entry in your former employer's ledger. What would concern me is transfer of title should you die. If they were in the hands of Fidelity (or their ilk) I think your estate planning would be simpler.

 

[Nords]

I have some shares (certificates) from a company I worked for when it was an early stage tech startup. The company is still private, but doing well and plans to go IPO or sell in 1-2 years.

Question - what are pros and cons of depositing the shares to my broker (Fidelity claims to place private equities)? Any experience to share on this topic?

Until it's time to register/sell your shares, all Fidelity can do is hold them for you. You could do that in a safe deposit box or, if they're lost/stolen, have the company cancel/replace them.

By any chance is your company planning to split their shares soon? Another paperwork reason to hold on to them yourself instead of giving them to Fidelity.

 

[wanaberetiree]

By any chance is your company planning to split their shares soon? Another paperwork reason to hold on to them yourself instead of giving them to Fidelity.

As a matter of fact, they already had split and told that they won't issue new certificates and do keep track by grand dates. One on reasons, I did not deposit them to a broker. I did ask the co for advice and they said it's OK to deposit.

Thanks for good points.

 

[Nords]

I did ask the co for advice and they said it's OK to deposit.

Your company is the last place I'd go to for advice on how to handle their shares.

Issuing new share certificates is done all the time and might not even require the board's vote, let alone shareholder concurrence.

The reason I asked about share splits is because Facebook is contemplating a 5:1 split that would give employees five time as many incentive shares. Of course that doesn't change the total dollar value of the shares before or after the split, but hundreds of investor-psychology experiments have confirmed that shareholders think share splits are more valuable and bid up the price accordingly.

A blogger I follow pointed out that the last thing a company needs is to offer incentives to employees who can't appreciate the cynical marketing behind share-split math.