ReGen Therapeutics has had an American Depositary Receipt Program in the US “Over-The-Counter” (OTC) financial sector since March 2005. Program information | Exchange: | OTC | | Symbol: | REGUY | | CUSIP: | 75885C105 | | Ratio: | 1:200 (1 ReGen ADR represents 200 ReGen Ordinary Shares) |
ADR Depositary ReGen’s Depositary is The Bank of New York Mellon and any general questions about the ADR Program can be directed to them at: The Bank of New York Mellon
Investor Relations
P.O. Box 11258
New York
NY 10286-1258, USA International Caller Telephone No. +1 610 382 7836
Toll Free Telephone No. (if calling from within USA) 1-888-BNY-ADRS (1-888-269-2377) Email shareowners@bankofny.com
Website: www.adrbny.com
Trading For general information on ReGen’s ADR Program, please contact the ReGen Head Office in London or further information on the US OTC market and the Pink Sheets can be found on the following website:- www.pinksheets.com Last updated 8th January 2010
The following is a brief general guide to some of the frequently asked questions relating to American Depositary Receipts. We cannot advise on the merits of ReGen’s American Depositary Receipt Programme nor provide any financial or tax advice.
1. What is an American Depositary Receipt?
An American Depositary Receipt (ADR) is a negotiable receipt issued in certificate or book-entry form, which represents shares in an existing outstanding class of equity shares in a non-U.S. company. Each ADR represents a number of American Depositary Shares (ADSs). In ReGen’s case, each ADS represents 20 Ordinary Shares.
ADR’s facilitate purchases by U.S. investor of non-U.S. securities and allows ReGen, as a non-U.S. company, to have stock traded in the United States by reducing or eliminating potential settlement delays, high transaction costs and other inconveniences associated with international securities trading. ADRs are treated in the same manner as U.S. securities for clearance, settlement, transfer and ownership purposes.
The Bank of New York Mellon, as U.S. depositary bank, will issue an ADR when the actual ordinary shares are deposited in the local custodian bank (The Bank of New York Mellon, with offices located in London), usually by a broker who has purchased the shares in the open market. Once issued, these securities may be freely traded on the International OTCQXSM in the U.S. over-the-counter market (see Question 4 below).
ADRs will be issued or created when you contact your broker to make a purchase. The broker, through its own international offices or through a local broker in the home market, purchases the actual ordinary shares and requests that the shares be delivered to the custodian bank. The broker who initiated the transaction will convert the U.S. Dollars received from you into the corresponding foreign currency and pay the local broker for the shares purchased. On the same day that the shares are delivered to the custodian bank, the custodian notifies the depositary bank. Upon such notification, ADRs are issued and delivered to the initiating broker, who then delivers the ADRs to you.
Please see note below in relation to the issue and cancellation of ADRs.
3. How does an ADR trade?
Once ADRs are issued, they are tradable in the United States and, just as with any other U.S. security, they can be sold to other investors. When an ADR is sold to another U.S. investor and the existing ADR is simply transferred from one ADR holder (seller) to another ADR holder (buyer), it is known as an intra-market transaction. An intra-market transaction is settled in the same manner as any other U.S. security purchase: in U.S. Dollars on the third business day after the trade date and typically through Depository Trust Company (DTC).
4. What is the Pink Sheets?
The Pink Sheets is a quotation service for over-the-counter (OTC) securities. An OTC security is generally considered to be any equity security that is not listed on the NASDAQ, NYSE or AMEX. The Pink Sheets is a privately owned company that permits NASD members to quote any OTC security and does not maintain U.S. regulatory filing requirements.
5. How are ADRs sold and cancelled?
When you want to sell your ADRs, you should notify your broker. The broker can either sell the ADRs in the U.S. market through an intra-market transaction or sell the shares outside of the U.S., typically into the home market, through a procedure known as a cross-border transaction. In cross-border transaction, brokers, either through their own international offices or through a local broker in the the home market, will sell the shares back into the home market. In order to settle the trade, the U.S. broker will surrender the ADR to the depositary bank with instructions to deliver the shares to the buyer in the home market. The depositary bank will cancel the ADR and instruct the custodian to release the underlying shares and deliver them to the local broker who purchased the shares. The broker will arrange for the foreign currency to be converted into U.S. Dollars for payment to you.
6. How does the market price the ADRs?
Once ADRs are issued and there are an adequate number of ADRs outstanding in the U.S. market, usually 3% to 6% of the company's shares in ADR form, a true intra-market trading market emerges. Until this market develops, the majority of ADR purchases result in ADR issuances resulting from the deposit of shares. When executing an ADR trade, brokers seek to obtain the best price by comparing the ADR price in U.S. Dollars to the Dollar equivalent price of the actual shares in the home market.
The continuous buying and selling of ADRs in either market tends to keep the price differential between the local and U.S. markets to a minimum. As a result, a significant majority of ADR trading is done in the form of intra-market trading and does not involve the issuance or cancellation of an ADR.
7. What is the Deposit Agreement and how is it relevant to me, as an ADR holder?
Because The Bank of New York will actually hold the ordinary shares held in the form of ADRs, you must rely on it to exercise your rights as a shareholder. The obligations of The Bank of New York Mellon are set out in the deposit agreement among the company, The Bank of New York Mellon, and you, as an ADR holder. Copies of the deposit agreement will be available for inspection at the corporate trust office of The Bank of New York Mellon, which is located at 101 Barclay Street, New York, New York 10286. The office of The Bank of New York Mellon, as custodian, is located at One Canada Square, London E14 5AL and The Bank of New York Mellon’s principal executive office is located at One Wall Street, New York, New York 10286.
If you are ADR holder, you must rely on the procedures of your broker or other financial institution to assert your rights as an ADR holder. You should consult with your broker or financial institution to find out what those procedures are.
8. What are the charges associated with holding ADRs?
| ADR Holders must pay: | For: | | $5.00 (or less) per 100 ADSs | Each issuance of an ADS, including as a result of a distribution of shares or rights or other property Each cancellation of an ADS, including if the agreement terminates | | $0.02 (or less) per ADS Registration or transfer fees | Any cash payment Transfer and registration of shares on the share register of our registrar from your name to the name of The Bank of New York or its agent when you deposit or withdraw shares | | Expenses of The Bank of New York | Conversion of pounds sterling to U.S. dollars Cable, telex and facsimile transmission expenses (if expressly provided in the deposit agreement) | | Taxes and other governmental charges The Bank of New York has to pay on any ADR or share underlying an ADR; for example, share transfer taxes, stamp duty or withholding taxes | As necessary |
9. Whom can I contact if I have further questions regarding ReGen’s American Depositary Receipt programme?
Please contact: ReGen Therapeutics:
[Percy Lomax at +44 (0) 20 8504 2156]The Bank of New York Mellon:
Toll Free Tel # for U.S. callers: 1-888-BNY-ADRS (1-888-269-2377)
Toll Free Tel # for non-U.S. callers: 1-610-382-7836By post: The Bank of New York Mellon, Shareholder Relations, P.O. Box 11258, Church Street Station, New York, NY 10286-1258 Email: shareowners@bankofny.com Website: http://www.stockbny.com Neither ReGen nor The Bank of New York Mellon can provide advice on the merits of ReGen’s ADR programme nor give any financial or tax advice. This guide does not constitute or form any part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of ReGen Therapeutics Plc.
10. ADR Issuance and Cancellation Notes
Issuance of ReGen ADRs
(1) If you wish to participate in ReGen’s ADR programme, ReGen Ordinary shares are to be deposited with The Bank of New York Mellon’s (“BNY”) custodian in the U.K., along with corresponding ADR delivery instructions.
BNY’s custodian information in the U.K.:
The Bank of New York Mellon
Crest ID: BO 011
One Canada Square, 40th Floor
Depositary Receipts Division
London E14 5AL
United Kingdom
Peter Ridgwell
Phone: 44 207 964 6168
Fax: 44 207 964 6024
Richard Preston
Phone: 44 207 964 7234
Fax: 44 207 964 6024
(a) If the shareholder is holding the ordinary shares in CREST (U.K. clearing system) via a broker, the shareholder is required to instruct their broker to deliver the ordinary shares to The Bank of New York Mellon’s CREST account with the Stamp Duty Reserve Tax Fee [1.5% of (ordinary share price) x (number of ordinary shares)] and the ADR Issuance Fee ($5.00 per every 100 ADRs issued) along with the corresponding ADR delivery instructions: (i) DTC participant account number and sub-account number, name and telephone number of the contact who will accept the delivery of the ADRs; or (ii) registration information for issuance of a physical ADR certificate (name, address, and (for U.S. citizens only) a Tax ID number.
(b) If the shareholder is holding a physical certificate representing the ordinary shares, the shareholder will need to send the share certificate, completed U.K. transfer form and check payable to the Bank of New York Mellon for the Stamp Duty Reserve Tax Fee (1.5% of the ordinary share price market price rounded up to the nearest five pounds) and ADR Issuance Fees ($5.00 per every 100 ADRs issued) to the contacts above, along with corresponding ADR delivery instructions (via US broker or ADR certificate). For issuance to a brokerage account, the issuance fee can also be charged to the receiving party in DTC. BNY can provide the “UK Stock Transfer” form and an “ADR Delivery Instruction” form for reference.
(2) The Bank of New York Mellon, as custodian, will credit The Bank of New York Mellon’s depositary’s account and notify the ADR issuance desk of the deposit.
(3) The ADR issuance desk will deliver the ADRs to the shareholder’s U.S. broker through DTC (U.S. clearing system), or the ADR issuance desk will deliver a physical ADR certificate directly to the shareholder. The delivery method for ADRs will depend solely on the instructions that our custodian has received from the depositing shareholder.
Cancellation of ADRs
For cancellation transactions, the order is simply reversed. Depending on how the ADRs are held (in broker form or in certificate form), an ADR holder will need to advise either the US broker or BNY’s ADR Operations Desk (New York) to cancel the ADRs. Corresponding U.K. broker account details or ordinary share certificate registration information, as well as payment of the ADR Cancellation Fees ($5.00 per every 100 ADRs) is also required. BNY and its custodian in the U.K. will then process the transaction and deliver the underlying ordinary shares to the holder per the instructions received.
Last updated 8th January 2010.
1099 Div
Form whereby The Bank of New York will report a registered ADR holder’s ADR dividend income to the Internal Revenue Service (IRS). Brokers and banks are requested to report to the IRS the ADR dividend income of the beneficial ADR holder on whose behalf they hold ADRs.
12g3-2(b) (Rule)
Exemption from 1934 Act registration with the SEC. Companies which receive this exemption from registration do not need to disclose their financial statements in accordance to US GAAP, on Form 20F. This rule allows companies to have their ADRs trade over-the-counter without US securities registration under the 1934 Act.
13F/Mutual Fund Filings
US institutional investors (with investments in excess of $100 million) and all mutual funds are requested to disclose their holdings to the SEC on an quarterly basis via Form 13F. This information is available to the public.
20F
Form whereby a foreign company’s US GAAP accounts (when filing the first time, information for the previous two years) and relevant company information are submitted to the SEC, effectively filing the company’s “registration statement” with the SEC. Form 20F needs to be filed by the company with the SEC every year, no later than six months after the end of the company’s fiscal year.
401K
US Individual Retirement Account. Most US companies have established facilities for individual retirement accounts for their employees; the accounts are similar to brokerage accounts (including a variety of funds, stocks, bonds, etc.) but benefit from special tax provisions. These accounts are called defined-contribution plans, as a defined contribution is deducted from the employee’s payroll and usually matched, to some degree, by the employer. 401K plans can give the employees the ability to manage their own accounts as any other portfolio and hence include their own company’s stock (namely ADRs) in their retirement accounts.
6-K
Interim statement filed with the SEC with a company’s market announcements, US GAAP accounts and other relevant company information.
ADP
Agency subcontracted by banks and brokers to distribute voting materials, annual reports and other materials to ADR beneficial holders. ADP will, in actuality, pass the company ADR proxy cards and annual reports onto ADR beneficial holders, according to address lists provided by these banks and brokers. BNY will not have access to these address lists provided by brokers/banks to ADP, as addresses are proprietary information of the brokers and banks.
ADR – American Depositary Receipt
US receipts representing shares in a foreign-based corporation. ADRs may trade on a US exchange or over-the-counter. ADRs are US$-denominated and technically considered US securities. ADR holders receive their dividends in US$. A depositary bank will hold the foreign shares (underlying the ADRs) in the foreign market, and issue a corresponding number of ADRs to the investor. ADR investors may cancel their ADRs and receive the corresponding underlying shares.
ADS – American Depositary Share
Shares represented by American Depositary Receipts (ADRs). The investor is the holder of the ADSs, represented by ADRs. The term ADS is generally used in a legal context.
Affiliate
Under US Securities Law, the term affiliate refers to a person who may have the ability to impact the performance of a given company’s securities. For instance, directors, senior management, strategic investors, etc., may fall under the legal definition of affiliate. Affiliates need therefore to hold their securities in restricted facilities. Legal advice is recommended to identify who may be considered an affiliate within the company.
Auto-proxy
The issuer may request that special language be entered into the Deposit Agreement’s voting section, effectively giving BNY the authority to vote in line with the management of the company with regards to all the ADR votes not received at BNY by the cut-off date – this is called auto-proxy. In other words, if a given ADR holder does not return their proxy card by the cut-off date, under auto-proxy, the vote shall be cast by BNY in favour of all the resolutions set out by The company’s management.
Beneficial Holders
ADR investors who hold their ADRs electronically via brokerage or bank accounts, through DTC (clearing system); beneficial holders do not appear directly on the company’s US ADR register kept by BNY.
Book-entry (dematerialized form)
electronic holding of securities, without any physical certificates being issued. DTC participants hold their securities in book-entry form.
Broker Marketing
BNY specialised team dedicated to promoting ADRs to the brokerage and institutional investment communities, and providing support to ADR clients in their ADR programs.
Broker Search
When The company does a proxy mailing distribution to beneficial ADR holders, an agency (eg CIC, Morrow, etc) will be contracted to search the number of sets of materials which each broker will need. The number of sets of materials corresponds to the number of investors on whose behalf the brokers/banks hold the company ADRs.
CEDE & Co.
DTC appears on the BNY ADR register under the name of CEDE & Co. For registry purposes, the whole DTC is considered one ADR registered holder, and the cumulative DTC position will appear on our register under the nominee name of “CEDE & Co”.
Conversion/exchange (Agent)
When a company issues convertible or exchangeable bonds, it requires an agent to convert/exchange these debt instruments into the equity to which they are linked. A conversion agent is required when an investor’s bonds are converted into stock in the company issuing the debt instrument. A conversion and exchange agent is required when an investor’s bonds are exchanged for stock in a company other than the one issuing the debt instrument.
Cross-border transaction
transaction where an ordinary share is bought in the UK for issuance of the corresponding number of ADRs in the US, or vice-versa.
Cusip Number
Identification number assigned to a particular class of US-traded securities for clearing purposes. The company ADRs will trade under a given CUSIP number assigned by the CUSIP Bureau.
Custodian
Bank holding the ordinary shares underlying the ADRs. In the case of a UK company, BNY also acts as the custodian on behalf of BNY.
Cut-off Date
Deadline for BNY to receive ADR votes (during the proxy solicitation process) or dividend election cards (where the ADR holder is given the option to receive a cash or stock dividend). ADR votes returned to BNY after the cut-off date will be tabulated. Where a dividend election card is received after the cut-off date, the ADR holder will receive its dividend according to a default specified in the dividend election card.
Defined-benefit plan
Traditional US pension plans, where the employer runs a retirement fund for all of its employees (or a few retirement funds for groups of employees). This plans is akin to European company pension funds, in that an employee will be eligible for a defined-benefit pension once vested (generally after reaching a certain age and so many years of service). ADRs can be included in defined-benefit plans.
Defined-contribution plan
Please see 401K.
Depositary
BNY acts as depositary for the company ADR facility. Among other functions, the depositary has a fiduciary responsibility with regards to the shares that underlie the company ADRs and for issuing and cancelling ADRs.
Dividend Election Cards
where a company gives its ADR holders the option to receive a cash or stock dividend, a dividend election card will be mailed to the ADR holders to request that they choose one of the options. If this card is not returned to BNY by the cut-off date, the dividend will be paid according to a default set out on the dividend election card.
Domestic Funds
funds allowed to invest only in US securities (including ADRs, which are technically considered US securities). These funds represent a large portion of the US investment base. Many public sector pension funds are domestic-only. Conservative or medium-sized funds tend to invest in domestic securities only.
DTC – Depositary Trust Company
US securities clearing and settlement system. Participants in DTC (i.e. banks, brokers and other investment firms) hold their securities in dematerialised (book-entry) form
DTC Participant
broker, bank or other investment firm who has an account with DTC, using it as an electronic depositary system for its holdings and settlement system for its transactions. Individual participants may now also hold their investments in dematerialised form through Direct Registration with DTC.
DTC Position List
list of investment firms’ positions in a given class of securities. This list allows The company to see how much each investment house holds in The company ADRs. However, DTC position lists will not display the investors on whose behalf these investment houses are holding The company ADRs, or whether these investment houses are holdings the ADRs for their own accounts.
ESPP
Employee Stock Purchase Plan – Plan based on monthly automatic deduction from the employee’s payroll for purchase of stock in their company. For instance, if the company elects to set up an ESPP, its US employees can have a portion of their income automatically deducted on a monthly basis for the purchase of the company ADRs. In some cases, these ADRs can receive special tax treatment if included in tax-advantageous retirement accounts.
F1
Form whereby a prospectus, including US GAAP accounts, is filed with the SEC by a foreign issuer, thereby registering an offering in the US.
F4
Form whereby a tender or exchange offering circular is filed with the SEC by a foreign issuer(for mergers and acquisitions), thereby registering the offer in the US.
F6
Form whereby ADRs are registered with the SEC and the Deposit Agreement is filed with the SEC.
Foreign Payable Date
For dividends, date when the company pays its dividend in the UK.
GBD
Global Buy Direct – BNY’s direct purchase and dividend reinvestment plan for ADRs. Under GBD, retail investors have the ability to initiate the purchase of ADRs via the BNY ADR website. If the investors so desire, they may also elect to have their dividends automatically reinvested in the same ADRs. GBD can be established by BNY free of charge to the company but only 90 days upon effectiveness of Form 20F.
Home Market
Market where the company has its primary listing in ordinary shares (UK, in the case of The company).
Intra-market trading/secondary-market trading
Trading within the US, either on a US exchange or over-the-counter.
Investor Relations Services
BNY addresses ADR investor queries through BNY’s dedicated Investor Relations Services, either by mail or toll-free telephone lines (1-888-BNY-ADRS = 1-888-269-2377).
IRS – Internal Revenue Service
US tax authorities.
Level I
ADR program without a listing on a US exchange. These programs trade over-the-counter, with market-makers acting as trading intermediaries. Foreign issuers with a Level I program are exempt from US registration under a special exemption.
Level II
ADR program with a listing on a US exchange but without an equity offering in the US.
Level III
ADR program with a listing in the US and a simultaneous equity offering in the US in order to raise new capital.
NASD
National Association of Securities Dealers.
Nominee
Broker, bank or other investment institution holding securities on behalf of a particular investor. The nominee used by BNY to custodise the underlying ordinary shares evidencing the ADRs is BNY (Nominees) Limted.
NYSE Specialist
agent responsible for facilitating the trading of the company ADRs on the NYSE floor. While NYSE specialists act primarily as trading intermediaries on the NYSE floor, their role transcends this function and they also act as market-makers with the purpose of building up liquidity.
OTC
Over-The-Counter (see Level I).
Paying Agent
The Bank of New York acts as paying agent for dividend and other special payments made by The company to its ADR holders. This service entails informing the markets, NYSE and NASD of dividend and other payments, and distributing cash and/or stock dividends. In the case of beneficial holders, the payments are channelled through DTC and in the case of registered holders BNY will mail a dividend check directly to the ADR holder.
Proxy card
card containing the Annual or Extraordinary General Meeting resolution proposals, whereby an ADR holder appoints The Bank of New York to vote at such a meeting according to instructions given on this card.
Proxy solicitation
process whereby The Bank of New York seeks the votes of ADR holders.
Ratio
In the context of ADRs, the ratio determines how many ordinary shares one ADR represents. In the case of The company, one ADR is equal to 5 ordinary shares. Consequently, the ratio is stated as 1:5. The ratio is an important tool in "Americanising" the price of a given stock (US stocks should be priced between $20 and $40, or in line with the peer group).
Record Date
Reference date used to determine which ADR holders are eligible to vote by proxy at a General Meeting or to take advantage of a particular corporate action. For instance, holders of ADRs on a particular record date will be eligible to receive a dividend payment or a distribution resulting from a stock-split.
Regional Broker Network
BNY network of regional broker firms, which tend to run domestic-only funds, allowed only to invest in US securities (including ADRs, which are technically considered US domestic securities).
Registered Holders
ADR investors who appear directly on the company ADR register kept by BNY in New York.
SEC
Securities and Exchange Commission.
Stock Transfer Agent (Registrar)
BNY acts as stock transfer agent (registrar) for ADR investors who appear directly on the BNY ADR register, holding ADR certificates in physical form. All distributions to registered ADR holders, including proxy materials and dividend payments, are handled directly by BNY. BNY will also report to the IRS, payment of dividends to the registered ADR holders, via Form 1099-div (see 1099-div).
Tabulation
Following a proxy solicitation, a tabulation will show the ADR votes received in favour and against each of the resolutions of the General Meeting. BNY will vote (or abstain), or cause to be voted, on behalf of the ADR holder, according to the information on the tabulation.
Tender and Exchange Agent
in the event of a tender or exchange offer, an agent will need to be appointed to process the transaction. This agent is the Tender and Exchange Agent.
US GAAP
US Generally Accepted Accounting Principles.
Working position
In order to satisfy ADR issuances in a timely manner and avoid the need to pursue a formal delivery of ADRs into DTC several time a day, BNY will maintain a working position where reserve ADRs are held to satisfy delivery in a T+3 timeframe. This working position will then be replenished once the ADR issuance is completed.
Last updated 8th January 2010.
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