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OVERVIEW OF EQUITY SECURITIES

Q: Cumulative preference shares

Think of cumulative preferred dividends as a debt the company owes you if they skip a payment. If the company can’t pay this year’s dividend, they don’t forget it — they owe it to you later . All missed dividends are “stored up” in a backpack called dividends in arrears . Before any common shareholder gets even €0.01 in dividends, the company must: Pay all past unpaid preferred dividends Pay this year’s preferred dividend Only then can common shareholders get dividends Key idea: Skipped dividends accumulate — the company must catch up.

Q: What challenges do investors face when buying foreign stock directly on a foreign exchange?

Investors receive returns denominated in a foreign currency , must follow the rules and procedures of the foreign stock exchange, and may face lower liquidity and less transparency than in their own domestic markets. Depository receipts are the solution for this

Q: What is a Global Depository Receipt (GDR)?

A GDR is a depository receipt issued outside the U.S. and the issuer’s home country , usually traded in London or Luxembourg, typically denominated in U.S. dollars, and available to U.S. institutional investors. GDRs avoid many capital flow restrictions and allow firms easier access to international investors.

Q: Explain American depository receipts (ADRs) and American depository share (ADS)

ADS = the real share in Japan, Germany, the UK, etc. ADR = the “receipt” Americans trade in the U.S., representing those ADS shares. Think of it like this: ADS = original stock. ADR = ticket that represents that stock in the U.S. American Depository Receipt (ADR) A financial product that: Trades in the United States Is denominated in U.S. dollars Represents shares of a foreign company Uses the foreign company’s ADS as the “real share” behind it

Q: What are Global Registered Shares (GRS)?

GRS are single share classes that trade directly on multiple stock exchanges around the world in different local currencies . Unlike depository receipts, GRS are the actual shares , giving all investors identical ownership rights regardless of where they trade.

8 important questions on OVERVIEW OF EQUITY SECURITIES

Cumulative preference shares

Think of cumulative preferred dividends as a debt the company owes you if they skip a payment.
If the company can’t pay this year’s dividend, they don’t forget it — they owe it to you later.
All missed dividends are “stored up” in a backpack called dividends in arrears.
Before any common shareholder gets even €0.01 in dividends, the company must:

Pay all past unpaid preferred dividends
Pay this year’s preferred dividend
Only then can common shareholders get dividends

Key idea:Skipped dividends accumulate — the company must catch up.

Can you have different classes of common stock (like stock A or B)

Yes

Depository receipts (DRs)

A depository receipt lets you buy a foreign company’s stock in your local market: the bank holds the real shares, you trade the receipts, and exchange rates still affect the value.

The depository bank acts as a custodian and manages dividends, stock splits, and other events.

What challenges do investors face when buying foreign stock directly on a foreign exchange?

Investors receive returns denominated in a foreign currency, must follow the rules and procedures of the foreign stock exchange, and may face lower liquidity and less transparency than in their own domestic markets.

Depository receipts are the solution for this

What is the difference between a Sponsored and Unsponsored DR?

Sponsored DR: Created with the company’s involvement; higher disclosure; investors receive voting rights.
Unsponsored DR: Created by the bank without company involvement; lower disclosure; bank keeps the voting rights.

What is a Global Depository Receipt (GDR)?

A GDR is a depository receipt issued outside the U.S. and the issuer’s home country, usually traded in London or Luxembourg, typically denominated in U.S. dollars, and available to U.S. institutional investors. GDRs avoid many capital flow restrictions and allow firms easier access to international investors.

Explain American depository receipts (ADRs) and

American depository share (ADS)

ADS = the real share in Japan, Germany, the UK, etc.
ADR = the “receipt” Americans trade in the U.S., representing those ADS shares.

Think of it like this:
ADS = original stock.
ADR = ticket that represents that stock in the U.S.

American Depository Receipt (ADR)A financial product that:

Trades in the United States
Is denominated in U.S. dollars
Represents shares of a foreign company
Uses the foreign company’s ADS as the “real share” behind it

What are Global Registered Shares (GRS)?

GRS are single share classes that trade directly on multiple stock exchanges around the world in different local currencies.
Unlike depository receipts, GRS are the actual shares, giving all investors identical ownership rights regardless of where they trade.

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