Majority shareholder buyout process?

I would be hesitant to buy on Proptee unless there was a process in place that a shareholder (or a group of shareholders) who own more than 50% of the shares in a property could buy the property from the Proptee holding company.

Will there be such a provision?

If there is not, I’m buying a share in something whose value could tend to zero (because Proptee could for example increase the management charge to 50%, and there would be no provision for properties to leave the platform).

Thanks for the question @Hello1024!

Proptee could for example increase the management charge to 50%, and there would be no provision for properties to leave the platform.

FCA regulates us to keep everything fair for the investors. We cannot just raise our fees to 50% one day. Also, why would we want to kill our own business for 50% of the management fee?

We don’t have a rule that allows majority shareholders to overrule smaller investors and just buy the property out of Proptee anytime. This would cause a big unbalance in the platform, as a wealthy investor who owns 50%+ in the property has decision-making power compared to the ones that don’t. Also, potentially it would be considered insider trading because the majority shareholder has more information than others and can move the market in his/her favour. Which goes against our terms of service.

However, properties can be bought out of Proptee on open market value, when Proptee agrees to it. We only agree to sell a property, when the majority of investors would be happy with the decision.

One other possibility is when you own all the shares in a property. Then it’s your own decision if you want to remove the property from Proptee.

1 Like