difference between depository and ordinary shares?

Oldman answered 4 months ago …

Ordinary shares are listed on an exchange which may restrict foreign purchasers - or cost more to trade. Depository (ADR's or ADS') are shares -and sometimes fractions or multiples of foreign shares- that have paid a fee to BONY-Mellon or Citi to be listed onan American exchange. The advantage to purchasing at a U.S depositary sites listing is the rapidir=ty of execution and the ease of liquidation and using stop-loss, limit or trailing stops for purchases and sales. The disadvantage is that the Depository will charge a small, per share fee, for every share purchased or sold, and for dividends accrued. Up until 2006, BONY didn't charge, then for 200 shares it was 2 cents/share, for dividends, it was 2 cents/share each time a dividend was declared and processed...etc.

However, one other disadvantage to depository shares is that the clearing house for the US depository may send only abstracts and late info for the proxies of some of the foreign firms. You can go to the site

http://www.stocksabroad.com

and to the sites for the ADR's, such as

http://www.bnyadr.com
http://adr.com

to get more info and links.

Mostly foreign security issuers have to fill out a lengthy application and have a lot of vetting by the SEC and the listing Depository, before they can issue ADR's. But they also have to pay a fee and comply with a lot of U.S. accounting requirements, so some seriously large companies, such as the giant German electric utility, WRE, and France's enormous Suez, decided...screw you! and recently delisted. Those stocks currently trade on the Pink Sheets (WREOY and SZEZY, respectively, just as examples of companies that aren't scams or weeny fly-by-nights on the OTC Pink Sheets)