Bloomberg Law Guest Article: Delisting and Deregistration Revisited:Considerations for U.S. Listed Foreign Private Issuers After the JOBS Act

12/03/2013


In the late 20th century, U.S. financial markets were regarded as one of the best venues in the world for non-U.S. companies to raise equity and gain access to a large pool of investors with a view to improve liquidity, lower capital costs and gain visibility in an increasingly global marketplace. Dual or cross-listed non-U.S. companies often received a ‘‘cross-listing premium’’—a higher market valuation in comparison to similar non-U.S. companies that are not cross-listed. The occurrence of several high profile corporate scandals at the start of the 21st century, followed by the banking debacle and ensuing global economic downturn, lead to increased corporate governance requirements and the passage of the Sarbanes-Oxley Act of 2002 (‘‘Sarbanes-Oxley Act’’) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (‘‘Dodd-Frank Act’’) financial reform legislation. These new laws have increased the cost of maintaining a listing on a U.S. stock exchange at the same time that economic conditions and other factors have reduced the attraction of a U.S. listing for many non-U.S. companies. In addition, many dual and cross-listed companies with low U.S. trading volumes and share prices, reflecting limited investor interest, may no longer be achieving the expected cross-listing premiums and attendant visibility and liquidity gains historically associated with a U.S. stock exchange listing, despite greater analyst coverage.

Excerpted from Bloomberg Law, December 3, 2013. To view full article, click here.

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