25 Apr Foreign Listed Companies: Consider Also Trading US ADRs

I am headed across the pond to spend some time in our firm’s London office this week. Why (besides the bacon sandwiches and good ale)? To meet with a bunch of folks about allowing the equity of already public UK companies to trade here in the US as American Depositary Receipts or ADRs. While this is not the place for a lecture on ADRs, it lets a receipt representing a share of the foreign company’s stock to trade here in the US. A bank acts as depositary of the shares and then issues the receipts.

And what’s so good about this? Quite a number of US institutional investors and funds cannot invest in foreign listed stocks, but can buy ADRs trading in US markets. With a strengthening dollar, currency issues are of less concern. This also allows the foreign company access to US capital for growth, to make acquisitions in the US using equity as currency, and enhance the overall liquidity in their trading. It’s especially good for companies with operations or customers here in the Colonies.

Whether you trade on the OTCQX, owned by OTC Markets, or Nasdaq’s new International Designation just launched in December, or bite the bullet and seek a full-on listing on a major national US securities exchange, you have the opportunity to do so with very manageable listing and compliance costs. In most cases you do not have to become SEC reporting or subject to Sarbanes-Oxley. Major foreign companies like Roche, BASF, Heineken, adidas, Marks & Spencer and Qantas Air are trading ADRs here without having become SEC reporting. Interested? You know where to find me!