ICI, the chemicals company, Tuesday became the latest British company to dispense with a secondary exchange listing in the US to save money and reduce the burden of regulation by the Securities and Exchange Commission.
The company, which has had a secondary listing since 1983, will delist its American Depositary Receipts from the New York Stock Exchange on or around June 18 when it deregisters under the Securities and Exchange Act.
Alan Brown, chief financial officer, said: “It no longer makes sense from a cost and administrative perspective to submit to the reporting obligations.” The company expects the move to save at least £4m ($7.9m) a year. However, ICI is not abandoning the US capital markets and will instead launch American Depositary Shares on OTCQX, a new pricing bulletin board launched by the Pink Sheets over-the-counter market.
An ADS represents foreign shares of a company held on deposit by a custodian bank in the company’s home country and can be traded.
Eleven foreign companies have listed on OTCQX since its creation in March as a way of attracting companies keen to avoid compliance with Sarbanes-Oxley, which comes with SEC registration.
Cromwell Coulson, Pink Sheets CEO, said there was “a backlog of about 20 [foreign] companies” waiting to join OTCQX, billed as a “premier tier” of the existing Pink Sheets market.
Tate & Lyle, the sugar and sweeteners group, became the first British company to join last month.
ICI delisted from five European stock exchanges in 2003 and will now trade only in London and OTCQX.
Under new SEC deregistration rules, a foreign company can deregister if it can show its US trading volume is 5 per cent or less of trading in its shares globally.
According to the SEC, 63 UK groups had a US listing at the end of last year. This ranked the UK third among foreign companies listed, after Canada and Israel.
Shares in ICI fell 0.5p to close at 539.5p.