re: adr's (a bit of research), page-6

re: adr's (a bit of research) Boofy et al,

Confusing isn't it. Lets explore the actual makeup of a companies register in order to understand how this works, then the answers will make more sense, I hope.

1. SSN has issued two classes of securities, these are Ordinary Shares and Options. Both are listed on the ASX which is SSNs only official listing. Both these classes of stock are administered by SSNs Australian share registrar. The list of shareholders and their holdings is known as the companies register of members. If you hold shares you are a member. Congratulations but sadly you no longer get a certificate as we once did when the industry was paper based.

2. SSN has approx 1.72b shares on issue plus a 271m options which will no doubt all be converted into ordinary shares over the next 18 months. When this occurs SSN will have approx 1.99b shares on issue.

3. Since most Americans can't easily access brokerage accounts to trade stocks listed on the ASX, depositories in the US market issue an instrument called ADRs which are receipts for foreign shares held by the depository. To make this work the depository buys SSN shares on the ASX via a nominee who holds these shares on behalf of the depository. The nominee can then issue receipts for shares held and these are traded as ADRs on the NYSE.

As American exchanges still have some funny old rules about minimum desirable securities prices the depositories often issue ADRs with a value equivalent of more than one share thus increasing the relative value of the ADR to meet exchange requirements. Each SSN ADR is a receipt for 20 SSN shares thus causing the ADRs to trade at just under $3 rather than the $0.13 that the underlying SSN shares trade at on the ASX.

4. SSN ADRs aren't shares but they do represent shares and thus their value is already included in the total shares on issue detailed above. ADR holders aren't registered on the register of members but the nominee who holds the underlying shares on behalf of the depository is. This means that SSNs share registry doesn't know who the beneficial holders are for shares held by the nominee and they or the company has to ask the depository(s) for actual details of the beneficial holders. This is why we hardly ever see a true top 20 holder list as these is actually more than one list maintained by different organnisations and nobody that I've seen can be bothered hashing them together.



So to answer your specific questions:

Boofy --> The ADRs represent shares on issue and thus are included in the 1.72b shares reported to be on issue. They are not in addition to.

jbmurc --> Yes, for every new ADR issued in the US 20 shares need to be purchased on the ASX by the local nominee. Depositories can't just issue ADRs without first buying the shares here. So if there is sufficient demand in the US to buy more ADRs and enough liquidity in the AU market to supply them then the nominees will buy more SSN shares on the ASX and the depository(s) will then issue more ADRs for Americans to hold SSN. There is no limit to this unless foreign ownership restrictions kick in which doesn't apply here as far as I'm aware. Bottom line, if you or put our shares up for sale they can buy them. If we don't then they can't.

Sandys ---> Yes the top 20 is ilways blurry when many of the holders are indirect as is the case with most companies. Having a huge percentage of beneficial holders not listed on the primary register of members makes it difficult to figure out who the top 20 year are but the company can and does ask the depositories for lists of the underlying holders from time to time. As stated above they tend to just publish the lists separately rather than consolidate them into a true top 20 but its not hard to see who the real top 20 are when you get all of the lists. The key is to remember that Nat Noms is the nominee who holds all the shares on behalf of the depository thus exclude most of their holding from the top 20 when combining it with the ADR top 20s.


I hope this helps answer your questions guys.

Cheers