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15
The Role of the Depositary Bank
| Regulatory Considerations for DRs
also been listed on the Singapore
Exchange, Frankfurt Stock Exchange
and NASDAQ Dubai. On the other
hand, Rule 144A GDRs trade in the
U.S. over-the-counter market.
When GDRs are offered simultaneously
in Reg S and Rule 144A form, but
in separate and distinct tranches,
they exist inside what is known as a
bifurcated GDR program. When the
GDRs are offered simultaneously in
Reg S and Rule 144A form, but not in
separate and distinct tranches, they
exist inside what is known as a unitary
GDR program. GDRs can also be offered
in Reg S form only.
Due to the general flexibility afforded
by GDRs, issuers from a variety of
regions, including Europe, the Middle
East, Africa, and Asia Pacific, have
been utilizing GDR programs to help
meet their capital-raising needs on an
increasing basis.
Upgrading a GDR to a Publicly
Listed Program
A non-U.S. company may decide to
list its DRs subsequent to its global
Rule 144A and Regulation S offering.
Upgrading from a GDR to a U.S.-listed
ADR program is a viable option for
companies wishing to achieve greater
global reach and visibility. Although
the Regulation S tranche may easily
be moved to a listed facility 40 days
after the Regulation S offering,
generally upgrading the Rule 144A
tranche is slightly more challenging.
A Rule 144A facility cannot actively
coexist with a U.S.-listed program.
In order to upgrade the Rule 144A
facility to a listed program, the issuer
will typically first need to file a Form
F-4 registration statement pursuant
to the Securities Act. After the F-4
registration statement has been filed,
a registered exchange offer with the
QIBs may be undertaken to exchange
Rule 144A GDRs with ADRs. Under
certain circumstances, and if the Rule
144A program is “seasoned,” the
issuer may opt for a private exchange
using a certification process rather
than a registered exchange under the
Securities Act of 1933.
Regulatory Enhancements:
JOBS Act
The Jumpstart Our Business Startups
Act (the “JOBS Act”), enacted on
April 5, 2012, liberalized certain
aspects of the Securities Act of 1933
and Securities Exchange Act of 1934,
in regards to registration and reporting
regimes for issuers that qualify as
“Emerging Growth Companies”
(“EGCs”) with annual revenues of less
than $1 billion. The law attempts to
reduce regulatory burdens on securities
offerings and thereby facilitate
capital formation and job creation.
It is said that the JOBS Act is the most
significant Congressional relaxation in
memory of restrictions surrounding the
IPO process, public company reporting,
and private capital formation.
The results of the JOBS Act remain
positive as the IPO market has re-
energized. Specifically, DR IPO activity
has surged as global issuers now
view the U.S. as a more attractive
international listing destination due to a
less costly regulatory environment.