International listing or foreign listing is listing in a country other than the country of first listing. It is also known as cross listing.
Both foreign and cross listing can be accompanied by a primary offering (issuance of new stocks), otherwise it is fully a secondary offering Many public offerings by non-U.S. companies are in the form of depositary receipts, usually as American Depositary Receipts (ADRs).
ADRs support distribution and trading of existing shares of stock and capital raising. Each ADR generally represents a multiple or fraction of the underlying securities and is quoted in American dollars. ADRs transfer ownership while continuing to be the registered holder of the underlying securities. They generally are structured so that the trading price for a company’s ADR will be in the range of U.S. $10 to $30. In addition to ADRs, a company can establish other structures that will allow it to list common shares in the U.S.
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Companies, that choose to list their securities on the NASDAQ Stock Market, must meet minimum initial and continued financial requirements. These requirements are designed to facility ate capital formation for companies worldwide and, at the same time, to protect investors and prospective investors in those companies.
NASDAQ’s quantitative listing requirements generally call for companies to meet higher thresholds for initial listing than continued listing, thus helping to ensure that companies have reached a sufficient level of maturity prior to listing.
NASDAQ also requires listed companies to meet stringent corporate governance standards, standards to which NASDAQ itself adheres. NASDAQ listing standards are transparent to companies and investors alike, and are rigorously enforced.
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Listing on NASDAQ gives international companies high visibility and access to a diverse pool of investors worldwide. In addition, NASDAQ promotes corporate growth and entrepreneurship by providing companies, market participants and investors with one of the highest quality equity markets in the world.
The U.S. securities markets offer companies access to the richest source of capital in the world as a result of their size, credibility and pool of enthusiastic investors. At the same time, taking a company through a public offering in the U.S. is a major undertaking and presents challenges to companies seeking access to this capital.
It would be interesting to know that many companies have primary listing at one place, but its economic center may be at some other place. To illustrate, in the backdrop of British handover of Hong Kong to China, Hong Kong and Shanghai Bank maintained its Hong Kong listing but moved both its headquarters and its primary listing to London and later on also got additional listing on NYSE and Euronext.
On the other hand, Jardine Matheson of Hong Kong moved its primary listing from Hong Kong to London. Its headquarters were already in Bermuda (since 1984). It had its second listing in Singapore, where most of the liquidity is.
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Foreign or cross listing helps in broadening the shareholder base (being made possible due to overcoming of capital market barriers), companies can get better issue price, investors can get better prices due to efficient pricing; the public image of the company and the country gets a boost, and the equity price gets exposed to new sources of risk.
However, cross listing has its own costs. Preparation of prospectus according to another country, due diligence, cost of advertising and road shows and so on involve lot of money. Similarly, each exchange has its own information requirements and accounting rules. Listing fee is to be paid. According to an estimate, listing on Tokyo Stock Exchange costs from USD 100,000 to USD 500,000 p.a.