With a November 11, 2022 deadline approaching, Marc Zboch of Emergent Global Capital is urging investors to convert their United States-issued American Depository Receipts (ADRs) into normal shares traded on the Russian exchanges.
According to Zboch, Russian law 114-FZ essentially cancels foreign shares traded outside of Russia. This means that Americans who were hoping that their frozen shares would someday trade again now have to worry about them becoming worthless forever.
Russia is allowing shareholders a brief window in which they can convert their U.S.-issued ADRs into normal shares traded on the Russian exchanges. Russia originally passed a law allowing investors to claim their shares directly from the Russian custodians by October 11, 2022. This date has been extended to November 11, 2022. After November 11, shareholders will no longer be entitled to claim the underlying shares through this program.
Navigating the bureaucratic conversion process can be challenging, Zboch said.
"Depending on the particular shares you own and the type of conversion, you may have to open a Type-C account in Russia, collect evidence of your ownership, translate and apostille documents, courier documents or take other steps."
Many investors don't realize that their ADRs or Global Depositary Receipts (GDRs) are not actual Russian shares, but rather tokens created to trade on international exchanges, Zboch said.
Emergent Global Capital continuously monitors the Russian government, depositary institutions and companies for changes. It offers full-service conversion for individual investors and consults with large institutions. Different stocks have different procedures. Emergent Global Capital helps gather all required information, translations and certifications needed for conversion. It also helps investors remotely set up Russian Type-C accounts and retrieve dividends they are owed.
With the deadline approaching, Zboch noted the time it takes for U.S. and Russian custodians to respond is taking longer. This will likely get worse as the November 11th deadline approaches.
Zboch suggests visiting the website RussiaDeadline.com, which has a list of all major Russian ADRs and GDRs. The site also shows the ratio of ADRs to Russian shares and gives additional information helpful for current valuation and conversion.