The Role of the Depositary Bank

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.