What to do when an ADR is delisted from NYSE or NASDAQ

One of the issues that investors in NYSE/NASDAQ-listed foreign stocks face is what to do when a company decides to delist from any of these two exchanges. In this post let us discuss some of the options available to deal with this issue.

Why do foreign companies delist from exchanges?

There are many reasons a company can decide to delist. Three of the main reasons are:

1. Lack of trading volumes

US investors may not show enough interest in a foreign company listed on exchanges here. As a result the daily trading volume may be thin. It is not unusual to have trading volumes in the low thousands or even hundreds of shares per day for such stocks. So a company may decide to discontinue listing.

2.High listing fees charged by exchanges 

The listing fees charged by NYSE or NASDAQ can run into thousands of dollars. Some companies may find that expense unjustified especially if there is lack of trading volumes. For example, $20,0000 listing fees per year to NYSE may not be worth it if there is hardly any investor interest in the stock.

3.High costs involved in SEC reporting

Overseas companies listed on the US exchanges have to follow the Security and Exchange Commission(SEC)’s regulations and file reports to them periodically. This involves additional work on their accounting and investor relations departments. Some companies may not want to spend on the added resources and deal with the reporting burden.

 What are the options available when a foreign stock delists from an exchange?

A couple of options to deal with this situation are discussed below.

1. Company delists its stock from the NYSE or NASDAQ and moves it to the OTC market:
Sometimes a foreign company may decide to delist from the organized exchanges and move to the OTC markets for any of the reasons mentioned above or some other reason. The company may continue to sponsor the ADR program. So trading will continue but just the venue will be different.

In such cases, an investor has the option to hold the stock even if it trades on the OTC. Just the ticker will change to a five letter ticker.

Many large-cap multinationals trade on the OTC markets. Some of them are: Nestle (NSRGY), Roche Holding(RHHBY), Imperial Tobacco Group(ITYBY), La Farge(LFRGY), DBS Group Holdings (DBSDY),etc. Some of the German companies that moved from exchanges to OTC in recent years include Bayer (BAYRY), BASF Group (BASFY),Daimler AG(DDAIY) and Deutsche Telekom (DTEGY).

In January of this year Siemens announced plans to delist from NYSE and move to the OTC. Currently it trades on the OTC market with the ticker SIEGY. While listed on the NYSE it traded with the ticker SI.

2. Company terminates its ADR program:

Sometimes a company may just terminate its ADR program for some reason. In such situations the ADR depository will notify ADR holders of the choices to redeem their ADRs. A company may simply terminate the program and payout a specific dollar amount for stockholders to surrender their stocks. Or a company offer the option to convert the ADR into the common stock trading on its domestic exchange in their home country. Very few companies offer this option due to the logistics, tax and other factors involved.

Some firms may decide to terminate its sponsored ADR program but let it trade in the unsponsored category. This decision is made by the ADR depository if there is trading interest and not by the company. Depositories can create unsponsored ADR programs without a company’s consent.

An example of ADR termination notice can be found here for Allied Irish banks plc.

Updates:

  • Bank of Ireland (IRE) ADR is already delisted from the NYSE. The bank’s ADR stopped trading on the NYSE on Feb 12, 2015. More details can be found in this article. However until April 22, the ADR will trade on the OTC market under the ticker IREBY.It will be delisted from the OTC market also effective April 22, 2015. If you hold the ADR, go here for your options.

Since the beginning of the year, some ADRs mainly those trading on the  OTC markets have been terminated.

Wondering if your ADR is terminated?

You can go to this page and check: BNY Mellon Terminated ADRs page.

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Disclosure: No Positions

36 Comments

  1. I have “ISCHY” Israeli Chemicals unsponsored ADR stock. Merrill Lynch, my custodial agent, indicates “no information is available on this stock” and the ticker symbol is now indicated as “465036200” – no longer showing as “ISCHY”. Can you tell me how I find out what is going with this stock, and how I contact investor relations for it?

  2. Thanks for your comment.

    The Depository for Israeli Chemicals unsponsored ADR stock is BNY Mellon. The ADR was terminated effective Oct 27,2014.You can either surrender or request underlying shares with the depository. You have until Jan 27, 2015 to do this. So you want to act fast and contact the depository whose contact info is listed in the termination notice. Here is the link for more details:
    http://www.adrbnymellon.com/files/AD40618.pdf (Termination notice)

    The stock will not trade on the OTC anymore.It will trade only on the Tel Aviv exchange as local ordinary shares.You have to contact BNY Mellon and not the IR contact.Hope this helps.

    Good Luck!
    -David

  3. I received a notice that BNY Mellon is going to terminate the deposit agreement for Bank of Ireland ADRs. How do I know if the ordinary shares will be easily tradeable if I elect to keep them? If dividends are paid in the future by the bank, will there be any issues with me receiving them if I elect to keep it as ordinary shares?

  4. Ben
    Ordinary shares will be easily tradeable as long as they trade on the domestic exchange. It can be a pain to keep track of that.I think dividends paid by ordinary shares are not getting properly credited to US customers’ account by brokers. In my experience with one British stock I did not find my broker knowledgeable and cooperative on this matter.So avoid all the headaches if I were you i would sell my ADR holdings and not bother with keeping the ordinary shares. Unless you own thousands or millions of ordinary shares it may be too much of a trouble to deal with the depository and brokers in trading and receiving dividends. Hope this helps.

    Thanks
    -David

  5. David – I also received the notice that ire adr will get terminated .. So I just wanted to know if I do not convert to ordinary share the depository will sell the share and will give from the procceds but the sale of procceeds will not happen before Apr 2016 .. So I wanted to know 1) how the depository sells the procceds ,is it based on current price of the underlying share when it terminates or will it be the price at when they decide to sell 2) thy have also mentioned i will be charged 0.05 $ per ads.. So what is difference between ADR and ads

  6. Hi
    Usually it will be based on the price at the time of actual termination.You have to check with them to make sure when they will sell it and what price. ADS and ADRs are basically the same. ADR is the depository receipt program and the shares are called ADS(American Depository Shares). Thx.

  7. Since its an ADR and is getting delisted from the NYSE you have to ask the investor relations of Quest if they can convert your shares to the ordinaries traded on the TSX. I haven’t done this before myself. But I think in most cases, they may not be willing to do that and will simply ask you to liquidate your NYSE shares on move on. So send them an email quickly or sell it and if you have a loss, use it to write it off in your tax returns.

  8. If I choose the option of converting the ADR to ordinary shares, is that considered a sale for tax purposes with associated Capital Gains/Loss?

  9. Nope.You will not be charged any taxes for converting ADRs to ordinary shares including any capital gain/loss associated with the transaction. Thx.

  10. Portugal Telecom (ADR) has delisted itself from NYSE. I own stocks of this company and so far have not received any letter from the company explaining my options. Any idea where to look? what to do now?

  11. Hi, I owned shares of BNY Mellon listed ADR PVD. BNY Mellon delisted the shares in 9-2014. I received no notice and waited till 8-14-2015 to get the proceeds for my auctioned off shares. Now my brokerage is treating the proceeds like a distribution and withholding 35% of the entire amount. They won’t listen when I try to get them to give me back the withholding. What recourse do I have?

  12. Ken
    Sorry for the delayed reply. I haven’t had this type of situation with my broker.

    Obviously what your broker did is not right. I would document all your dealings with them on this issue and file a complaint with the SEC or FINRA. And advise your broker that will move your assets to their competitor if they won’t do the right thing. Unfortunately that is the only recourse you have. If your broker is a reputed one they will resolve this. Thanks.

  13. Good Evening!

    I own stock in NBG – ADR, and was recently notified it is being delisted from the NYSE. There was no prior warning for this happening, and I’m a little concerned that I will lose all of my money along with the millions other investors have put into this stock.

    Thanks in advance for your input!

  14. Sorry to hear that own NBG shares. Anyway NBG can appeal the delisting order with NYSE but seems like it is unlikely to happen. You may be able to cash out what its worth before the delisting date if the depository and NBG permits it. Please contact BNY Mellon depository and check:
    Ravi Davis
    Tel: 65 6432 0281

    In the worst case scenario I am afraid you have to take the loss and ask your broker to remove it from your account and then use the losses for tax purposes. You can deduct $3k per year for taxes.You can also wait and see if NBG starts trading on the OTC market. If it does then you can sell it there or wait if it comes back up to your cost price. Hope this help.s Thx.

  15. Hi,
    Any examples of an ADR delisting due to merger/acquisition in its domestic country? Would be great if you can share any delisting rules/regulations in case of M&A’s on NYSE/NASDAQ exchanges.

    Regards.

  16. Hello,

    I have Volvo ADR’s terminated sitting at JP Morgan. The Volve ADR’s were terminated on Jan 7, 2016.
    I wish not to sell the ADR’s at this time, and I was told by JP Morgan that I would need to find a broker to get the cancelled ADR’s issued to me. This is somewhat complicated as I am Canadian.
    Any information of suggestions you can pass along would be greatly appreciated!

    Thanks

  17. Andy
    Thanks for the comment.

    Unfortunately I do not have additional info to help with your situation. I am afraid you have to search for a broker that will do that.
    You may also want to do some research online for some Canadian sites that may have information. Good luck !

    -David

  18. Hello David, thx so much for the Citi link!,…I’ve reached out to them.
    Will follow-up when I hear back.

    Appreciate your help

    Andy

  19. Hello,
    I own shared of Western Lithium (WLCDF) which recently changed its name to “Lithium Americas Corp” and began trading on the Toronto Exchange (LAC) and on the OTCQX. My ETrade account shows the symbol as a bunch of numbers. I am a novice investor and I don’t know what happens to my shares or if and how I can continue trading this stock. Please advise. Thank You.

  20. Jack
    Western Lithium and Lithium Americas merged together and now trades as Lithium Americas Corp. (LAC.TO) on the TSX. So you WLCDF shares stopped trading and the new company’s ordinary shares are not trading on the OTC market.The string of numbers you see in your account is probably the CUSIP #.

    You cannot continue to trade the stock as it is delisted on the US OTC market. Not sure if they gave you the option to convert to the ordinary shares of the new firm on the TSX. So you have to contact Etrade and ask them how to liquidate your shares on the TSX market and get your liquidated amount. Thats the easiest option at this point. Basically ask them you want to sell the stock and get your money back and they will reply what you can and cannot do at this point. Hope this helps.

    Good luck
    -David

  21. Just received a notice from Deutsche Bank to Registered Owners of ADRs stating that the termination of the September 23 2010 Deposit Agreement effective date at the close of Business 90 days from Oct 7 2016 or is January 5 2017.
    Deutsche Bank Trust Company filed for and intend to establish an unsponsored ADR program for shares of Daimler AG. Holders of sponsored ADSs will be eligible to cancel their ADSs and receive the Daimler AG shares represented thereby.
    What does all of this mean and what are my possible options?

  22. Yep. This situation is fairly common and you have some options.
    1. Since the ADS program is getting terminated you can surrender your shares to the depository bank (DB) and they will pay you the proceeds of the sale net of any fees.
    2. You can wait for the unsponsored ADR program to start trading and convert your sponsored ADS to those. Contact DB for the process to this:
    Corporate Actions Markets Distribution

    adr.corporateaction@list.db.com
    New York
    Tel: +1 212 250 9100
    3.Convert your ADSs to the Daimler AG ordinary shares traded on the domestic market in Germany. This is complicated and not all companies and depository banks will allow this. Again contacting DB is the best option for this.

    For more info click this link:
    https://tss.gtb.db.com/FileView/Data.aspx?URL=dbdr/publication/Other/8695_OCT072016122608PM.pdf

    Hope this helps.

    Good Luck!
    -David

  23. I own diamler adr’s and I can not find out what is going on. The line to the transfer agent is always busy. the only word I understand is terminate. If anyone can help please do. joseph

  24. Sorry about your situation. Here are some options:
    Yep. This situation is fairly common and you have some options.
    1. Since the ADS program is getting terminated you can surrender your shares to the depository bank (DB) and they will pay you the proceeds of the sale net of any fees.
    2. You can wait for the unsponsored ADR program to start trading and convert your sponsored ADS to those. Contact DB for the process to this:
    Corporate Actions Markets Distribution

    adr.corporateaction@list.db.com
    New York
    Tel: +1 212 250 9100
    3.Convert your ADSs to the Daimler AG ordinary shares traded on the domestic market in Germany. This is complicated and not all companies and depository banks will allow this. Again contacting DB is the best option for this.

    For more info click this link:
    https://tss.gtb.db.com/FileView/Data.aspx?URL=dbdr/publication/Other/8695_OCT072016122608PM.pdf

    Hope this helps.

    Good Luck!
    -David

  25. Hello David, thank you for your reply. I was cut off, do not own a computer and I use one at the local library. Since the last time you helped, 2 days ago, I have not been able to get in contact with the transfer agent. From what I understand DB is in a lot of trouble and the US wants $14 billion from DB and I can not find out if DB is a stock broker and I do not have a DB in my area to talk to. The only thing to do is to is to go to a broker to sell or sell through the transfer agent. I do not like to give up the certificate because I will be subject to reorg fees and late time to get dividends. thanks again joseph

  26. I have ADS in Arcam trading as AMAVF. GE Sweden is buying the company and if they obtain 75% of the stock they will delist it. I did not sell to GE before they closed the US offer. I can still sell the stock in regular trading. What would happen if I didn’t sell and they delisted it? What does it cost to sell a delisted ADS? Does the value usually go up or down? What does owning an ADS of a delisted stock mean?

  27. Joseph
    Keep trying to get a hold of the transfer agent.If they are not answering try complaining to the Daimler Investor Relations.Maybe that might help.
    Otherwise the best option is to sell your shares and move on.

    Yes.DB is in a lot of trouble but that should that affect things like the transaction you are trying to do with them. Even if they have to pay big fines they cannot ignore their duty to their clients.

    Thanks
    -David

  28. If the stock is delisted and you did not sell it then unfortunately it will become worthless.Selling a delisted stock is difficult since a broker has to first find a buyer willing to buy your stock. So your best bet is sell the ADS when there is some trading and move on.

    Hope this helps.
    -David

  29. Hello David, No one answers. I understand 1,sell on the pink ddaif or ddaiy . 3 put the stock in domestic market in Germany, understand, not a good idea. Don’t understand delisted and listed, why would DB delisted, will they delist in part 2. Part 2 is the part I can not understand and it is driving me out of my mind. I think I have sponsored and in part 2 they will turn into unsponsored, I do not understand. I have the adrs in my name and took paper work to broker but the only thing they want are the certificates. Can I sell the stock In part 2 unsponsored after Jan 5th? I have never come across such an upside down crossways situation and not in english. Is there more paperwork on the way? When did Daimler go pink? I thought they traded in the New York Stock Exchange? joseph

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