1112004 Informal Interpretation

Michael Verne

– Holding an ADR does transfers beneficial ownership of the underlying voting


From: (Redacted)
Sent: Friday, December 16, 2011 11:42 AM
To: Verne, B. Michael; Walsh, Kathryn; Berg, Karen E.
Subject: ADR's

Hi All,

I have a question aboutcounting American Depository Receipts as voting securities and beneficialownership. A description of the particular ADR voting rights I am consideringfollows:

Although the depositaryreceipts themselves do not formally have voting rights, holders of depositaryreceipts are in practice equated with shareholders. They can attend all GeneralMeetings of the issuer, either personally or by proxy, and also have the rightto speak. The holders of the depositary receipts will then automatically,without limitation and under all circumstances, receive a voting proxy onbehalf of the trust that issues ADRs [in exchange for the voting securities itholds] to vote on the underlying shares.

The trust is obliged tofollow the voting instructions ofholders of depositary receipts. The same applies to the voting instructions ofholders of depositary receipts not attending a shareholders' meeting and whoissue voting instructions to the trust via the [issuer's host country'sshareholders' laws].

Holders of depositaryreceipts can under all circumstances exchange their depositary receipts for theunderlying shares (and vice versa), and are entitled to dividends and alleconomic benefits on the underlying shares owned by the trust.

Based on these facts, arethe ADRs voting securities with a current right to vote (and thus not exemptfrom the HSR reporting requirements)? Or, to state it another way, does holdingthe ADR grant beneficial ownership of the underlying voting securities? If not,then I presume that the trust is the beneficial owner of the voting securitiesand the holder of the ADR merely holds a convertible voting security (notsubject to the HSR Act's reporting requirements until conversion).

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