Category: Money tips Release Date: 2007-01-01
As the American Depositary Receipt program for non-US listed companies to enter the U.S. market, the most effective way, so almost all of the non-US listed companies through American Depositary Receipts of the way into the U.S. capital markets, rather than the way of ordinary shares issued ADS approach landing sodium City. Many investors call the editorial asked whether the issuing depository receipts listed on the direct issue of shares with the domestic market, What is the difference between the two? This issue, we invite investment in M & A experts, the East High St. investment adviser, Mr. Ji Shu-peng for readers to be answered.
Beijing Fengtai District, shareholders Chen: What is the depository receipts, which is how does it work?
Ji Shu-peng: Depository Receipts, also known deposit receipts or ADRs coupons, refers to a country's securities market to foreign companies on behalf of the circulation of negotiable securities certificates. Here's securities that may be stocks, bonds can also be. In 1927, the American JP Morgan in order to facilitate investment in the United Kingdom shares the Americans invented the Depository Receipts.
In practice, a commercial bank by the United States, as depositor, and then the company issuing the stock certificates deposited in the bank's overseas custodian bank, the depositary bank will be released in the United States on behalf of the company's stock may be negotiable ticket. As can be seen outside the company's ADRs are actually an alternative securities depositary shares, in essence, is still stock.
Haidian District, Beijing shareholders Zhao: Baidu Nasdaq Why do not you go to issue ordinary shares directly instead of using ADR methods?
Ji Shu-peng: Actually, not just Baidu, Focus Media, the domestic enterprises to the U.S. market are based on the ADS method. This is because under U.S. securities law, listed companies in the United States must be registered in the U.S., such as the state-owned enterprises in the oil can not be put on the foreign registration, then only way to enter the United States to take ADS the capital markets.
Chaoyang District, Beijing shareholders Mr. Han: What are the benefits of issuing depository receipts?
Ji Shu-peng: In the United States, some institutional investors can not buy foreign stocks, such as U.S. pension funds, insurance companies, but they can be purchased in the United States and the United States Securities and Exchange Commission registration of American Depository Receipts. In addition, holders of Depositary Receipts are foreign stocks than the direct advantages of more convenient, as depositary receipts denominated in local currency, investors can be avoided due to exchange rate fluctuations of foreign exchange settlement risk, but also save its swaps and outturn trouble.
Mr. Zhang Chaoyang District, Beijing stock investors: the United States, ADRs have several?
Ji Shu-peng: In the United States, ADR generally divided into two types, secured and unsecured, at present no guarantee has been rarely used, secured ADR is divided into four kinds, respectively, for different markets. 2 textile machinery such as Shanghai, Shanghai Lujiazui is the one used in ADR, they can only be at the counter trading of securities (OTC market), there is no fund-raising capacity. And as China Southern Airlines, Yanzhou Coal, Jilin Chemical Industry issued a three ADR, is the New York Stock Exchange, NASDAQ direct transactions, and have the fund-raising capacity. Another one is 114A under the rules of ADR, primarily for the private market, it is in the information disclosure requirements are very relaxed, such as Yizheng Chemical Fiber. (Reporter: Zhang Jingyu)
