The Role of the Depositary Bank

10 Issuer Services Table 5: A Snapshot of DR Program Types U.S. Market — ADR International Market – Broaden Shareholder Base with Existing Shares Raise Capital with New Shares Raise Capital with New Shares Over-the-Counter Level I U.S. Listing Level II U.S. Listing and Public Offering Level III U.S. Private Placement Rule 144A DR Non-U.S. Private Placement Regulation S (GDR) Description • Unlisted Program in the U.S. • Listed on a major U.S. Exchange • Offered and listed on a major U.S. Exchange • Private placement in U.S. to Qualified Institutional Buyers (QIBs) • Placement in non-U.S. markets • May also be accompanied by a U.S. tranche as a Rule 144A placement Trading • OTC: Quoted in the Pink Sheets or on OTCQX • NYSE or NASDAQ • NYSE or NASDAQ • In U.S. 144A DRs are traded OTC • Usually a non-U.S. Exchange SEC and GAAP Requirement • No U.S. GAAP reconciliation required • SEC compliance and partial reconciliation to U.S. GAAP or qualifying IFRS • Full SEC compliance including full U.S. GAAP reconciliation or qualifying IFRS • GAAP conformity not required • GAAP conformity not required SEC Filings • File Form F-6 • File Form F-6, 20F • File Form F-6, F-1 and 20F • No SEC registration requirements • No SEC registration requirements Over-the-Counter Traded ADR Programs (Level I) An over-the-counter traded ADR program (Level I) is the most cost- effective way for a non-U.S. company to have its equity traded in the U.S. and access the incremental pool of available capital. Level I ADRs are traded on the OTC Markets platform, which includes three trading levels: • OTC Pink: A centralized marketplace designed for all types of companies with no specific financial standards or reporting requirements. The platform is further sub-categorized by the levels of information that issuers provide and is an ideal stepping stone platform for entrance into the U.S. markets with limited requirements from issuers • OTCQB: For small or developing U.S. companies (SEC reporting) or an internationally listed company on a qualified non-U.S. stock exchange • OTCQX: Exclusively for companies that meet the financial standards and undergo a qualitative review. To qualify, companies must meet financial standards, be current in their disclosure, and be sponsored by a professional third-party advisor. Ideal for issuers that desire a high-level engagement with their DR programs. Investor access to OTC traded ADRs is comparable to listed U.S. securities as it provides access to incremental pools of capital through U.S. funds that are mandated to invest in U.S. dollars or do not have local custody capabilities to invest in the ordinary shares. Additionally, retail investors can buy and sell OTC-traded ADRs, through their brokers. However, solicitation to retail investors requires Blue Sky exemption. OTC-traded ADRs provide a multitude of benefits to issuers seeking to test the U.S. equity markets and build a core level of ADR holders, prior to exchange listing or raising capital by Level III issuances. Level I ADRs have minimal regulatory requirements in which no reconciliation of financial statements to U.S. GAAP is required and exemption is granted from Sarbanes-Oxley Act and other U.S. reporting requirements under SEC Rule 12g3-2(b). As a result, OTC-traded ADRs are the simplest and most cost-effective type of ADR program to establish, while affording issuers access to a diversified shareholder base. Similarly, investors can achieve a wide range of benefits from Level I ADR programs. These programs facilitate investor’s desire for diversification and trade, clear and settle in accordance with practices in the investor’s home market, eliminating the need for local custody and safe-keeping solutions. Additionally, as ADRs are quoted in and pay dividends in U.S. dollars, this overcomes obstacles investors may have with purchasing securities outside their local market. In order to establish a sponsored Level I ADR program in the U.S., the issuer must: • Confirm and qualify for Rule 12g3-2(b) exemption • File Form F-6 with the SEC which includes the Deposit Agreement as an exhibit. A Level I ADR can be “sponsored” by a single depositary bank involving the issuer or “unsponsored” by multiple depositary banks with no involvement from the issuer. Unsponsored ADRs are created based on investor demand