Is someone able to explain to me the difference between a type II and type III? They seem pretty similar? Level II: This type of ADR is listed on an exchange or quoted on any official U.S. stock exchange, including the NYSE and Nasdaq. Level II ADRs meet the registration requirements of the SEC but they also get higher visibility trading volume. Level III: These are the most prestigious of the three types, in which an issuer floats a public offering of ADRs on a U.S. exchange. Level III ADRs enable the issuer to raise capital and gain visibility in the U.S. financial markets.
I’m not sure myself but the principle difference seems to be that Level 3’s are more focussed to raising capital while Level 2’s are more a means of attaining visibility in the US market. Also, BOTH of them meet the registration requirements of the SEC.
Right, I agree with quantforCFA. The level II is the most common which is just having shares of a foreign company’s stock listed on our exchange, and level III is the full sha-bang and is used to raise capital for the firm. From what I understand a level II will not raise any capital for the firm
LIII allows the company to raise capital through issuing new stock but reporting requirements and legal stuff is fairly similar.
raising capital is the big difference
the kind of gritty, nitty stuff i’m trying to learn at the end. i saw the ADR levels on a mock. of course, i’m finding the my comprehensive knowledge is somewhat lacking too.