Tata Motors on Wednesday announced that it will delist its American Depositary Receipts (ADRs) from the New York Stock Exchange (NYSE) from January 2023 and terminate its American Depository Share (ADS) program roughly 18 years after they started trading. Each ADs represents five ordinary shares of the company with each share costing Rs 2.
The homegrown multinational automotive manufacturing firm said that they have notified the NYSE of its intent to voluntarily delist its ADS on Wednesday. The last trading day on the NYSE is expected to be on or around January 23 next year. After the last day there would be no over the-the-counter market trading in the US as the Indian law has regulatory restrictions against it.
The holders of the ADS will have to present their ADSs to Citibank, NA for cancellation before the cut-off time and delivery of the underlying ordinary shares of the company.
“Since the company’s ADS were issued in 2004, it has witnessed a considerable increase in liquidity and foreign shareholder participation in the equity stock markets in India. The company has considered the consistent drop in the number of ADS outstanding as a percentage of its outstanding ordinary shares. Therefore, the rationale for ADS listing in the United States has significantly diminished,” said Tata Motors in an exchange filing.
The company also added that this move will help them simplify financial reporting requirements and also reduce their administrative costs. After delisting the company said that it would focus on trading its equity shares on BSE and NSE.
What are American Depositary Receipts (ADRs)?
Foreign companies in the US stock exchanges can list in the form of ADRs, which is a negotiable certificate by a US depository that proves one's ownership on a certain specified number of shares. This gives US investors a chance to gain exposure to non-US stocks as the ADRs trade on the market like any other domestic shares.
On Wednesday Tata Motors in their second quarter earnings ending September reported a consolidated net loss of Rs 944.61 crore. The company had reported a net loss of Rs 4,441.57 crore for the same quarter period last year.
