The use of American Depositary Receipts (ADRS) by South African public companies

Authors Zama Chonco

ISSN: 2521-2575
Affiliations: Legal Counsel, Corporate and Investment Banking, Barclays Africa Group Limited
Source: Journal of Corporate and Commercial Law & Practice, The, Volume 1 Issue 1, 2015, p. 63 – 92


The process of globalisation, described as ‘the growing interdependence of countries resulting from the increasing integration of trade, finance, people and ideas in one global market place’, [fn1] has been a catalyst for economic growth in many developing countries such as China, Hong Kong and South Africa, by encouraging international trade as well as cross-border investment. A popular mechanism utilised to promote crossborder investment is the direct listing of a public company’s shares on more than one exchange. [fn2] Cross-listing enables a South African public company to issue the same class of its shares on the Johannesburg Stock Exchange (hereinafter referred to as the JSE) as well as on a foreign exchange; with the set of shares trading on the JSE being traded in South African rand and the shares trading on the foreign exchange being traded in the currency of that foreign exchange. [fn3] There are many exchanges that facilitate that. [fn4] The process of trading in a company’s securities either in the over-the-counter (OTC) market or on an exchange through an American Depositary Receipt programme (ADR programme) has been gaining popularity with emerging economies since the early 1990s and is generally considered the most popular type of crosslisted security to date. [fn5] South Africa is not an exception to this global trend. In 1983 only three South African public companies had instituted ADR programmes, [fn6] whereas, as of 3 December 2013, as many as 35 of the JSE ‘Top 40’ listed companies have instituted ADR programmes, [fn7] with 24 companies instituting their ADR programmes in 2013 alone. [fn8] footnote 1: Beyond Economic Growth (ch 12 Globalization and International Trade) available at, accessed on 18 February 2014. footnote 2: Kathleen van der Linde ‘Aspects of the cross-listing of securities’ (2009) 21 SA Merc LJ 631. footnote 3: Yuliya Guseva ‘Cross listings and the new world of international capital: Another look at the efficiency and extraterritoriality of securities law’ (2013) 44 Georgetown Journal of International Law 411. footnote 4: Available at, accessed on 25 April 2014. footnote 5: Guseva op cit note 3 at 424. footnote 6: Bank of New York Mellon: Depositary Receipt available at, accessed on 25 April 2014. footnote 7: ‘Corporate news: Clover launches ADR programme in US’ available at, accessed on 25 April 2014. footnote 8: Op cit note 6.