The Benefits of a US Listing for a Foreign Issuer
There is substantial evidence that foreign companies whose shares trade in the United States enjoy a higher valuation than those companies whose shares simply trade in their domestic markets. The United States has the world’s largest economy and the most well developed securities markets. The benefits of a US Listing for a foreign issuer are substantial. Not only are the US markets an active trading venue for foreign companies, they are also the place where large numbers of foreign investors come looking for new investment opportunities. This equates to a greater amount of exposure than would be possible simply trading on your domestic exchange. We also believe that companies whose shares trade in the United States see increased trading volumes in their domestic markets as well. This leads to improved liquidity for their domestic shareholders and improved capital raising prospects.
Foreign Securities Trading on US Markets
The US Securities and Exchange Commission (“SEC”) has a Rule 12g3-2b – Exemptions for American Depository Receipts and Certain Foreign Securities, that provides for an exemption from US registration requirements for foreign corporations whose shares trade on a qualified foreign exchange such as the Canadian Stock Exchange (“CSE”). This basically allows foreign companies to have their shares trade in the United States without having to register with the SEC or file a US registration statement. OTC Markets maintains a list of Qualified Foreign Exchanges. Companies who trade on one of these exchange and qualify for this exemption are able to utilize their domestic disclosure filings here in the US. Additionally, this exemption allows foreign companies that qualify to have an expedited review of the application for their shares to traded in the United States.
Additional Item, DTC Eligibility
In order for an active trading market to develop, a foreign company needs more than a US listing. It also needs to secure DTC Eligibility; which for those who are unfamiliar with the term, is the ability to have their shares deposited into a US based brokerage firm. This increases the number of broker/dealers that are capable of trading the Company’s shares, and the ability of US investors to buy and sell those shares. Very simply without DTC Eligibility, a US listing would not provide much benefit to a foreign company. Once your firm’s shares are DTC Eligible, the next step is help facilitate cross boarder trading. This involves getting the broker/dealers that trade here in the US, and on the company’s home exchange to begin making a market in the company’s shares.
Coral Capital Advisors is able to provide your firm US listing services, DTC Eligibility and the other items necessary to create the conditions that allow for the development of an active trading market in your firm’s shares. The benefits of a US listing for a foreign issuer can be very substantial.
Benefits of a US Listing
There is substantial evidence that foreign companies that list their shares in the United States see substantial benefits from a US listing. A 2018 research paper concluded that foreign companies saw increased liquidity of their shares, increased access to capital, an improved image of their company among investors, and a substantial increase in the number of shareholders.
We look forward to discussing this opportunity with you. Please feel free to reach out to us with any questions you may have. I can be reached via. either my direct line of 775-787-6677 or cellular # 775-997-5501. Additionally, our corporate headquarters can be reached via. office telephone # (404)-816-9220.
About Coral Capital Advisors
Coral Capital Advisors is an independent consulting and advisory firm focused on companies and participants in the lower and middle markets. We partner with our clients to provide cost effective solutions to real world issues and situations. Our experienced team brings a diverse set of skills that allows us to service a wide variety of needs. Coral Capital Advisors, LLC. provides services to Investment Banks, Private Equity Funds, investors, and both privately held and publicly traded companies, as well as various stakeholders in those organizations. This has included international public companies with operations on three (3) continents to smaller privately held domestic companies. Our experience in the areas of corporate advisory, due diligence reviews, and regulatory compliance allows for a cost effective and efficient solution to the issues at hand. Please feel free to contact our offices to see how we may be of assistance.
[1] SEC