What is an ADR?
An American depositary receipt (ADR) lets you own a foreign company's shares through a US bank. The bank holds the actual shares abroad and issues receipts that trade in the US, in US dollars.[S1]
Each receipt stands for American depositary shares (ADSs). The SEC's investor bulletin says the two terms are often used interchangeably.[S1]
The company behind an ADR is often a "foreign private issuer": a company set up outside the US that meets SEC tests on where its owners and business are.[S5]
How does the ADR ratio work?
An ADR does not always equal one share. The bulletin says it may stand for one share, several shares or a fraction of a share.[S1]
The formula is simple:
Underlying shares = number of ADSs × shares per ADS
The company states its ratio in its filings. Form 20-F asks for the amount of deposited shares that one ADR unit represents.[S2]
How does Arm's listing work?
Arm is incorporated in England and Wales. Its 20-F cover lists "American Depositary Shares, each representing one Ordinary Share" on Nasdaq under the symbol ARM.[S6]
The bank is Citibank, N.A., under a deposit agreement dated Sep 13, 2023.[S6] Arm's ADSs began trading on the Nasdaq Global Select Market on Sep 14, 2023.[S6]
Arm's 20-F says ADS holders are not treated as holders of its ordinary shares. The depositary, its custodian or their nominee holds those shares.[S6]
How are ADRs created and canceled?
The bulletin explains it. The foreign company, or an investor who already owns its shares, delivers them to the bank or its custodian abroad.[S1]
The bank then issues ADRs that can be resold in the US. Holders can also hand ADRs back and receive the underlying shares instead.[S1]
What are sponsored ADRs and the three levels?
A sponsored ADR has an agreement between the company and the bank. An unsponsored one is set up without the company, sometimes by a broker-dealer.[S1]
Market participants group programs into three levels, the bulletin says:[S1]
- Level 1: over-the-counter trading only, no capital raising. Only Form F-6 is filed, so EDGAR has no company reports.
- Level 2: listed on a national exchange, no capital raising. The company files annual reports on Form 20-F.
- Level 3: listed and used to raise money, with a registration statement such as Form F-1, plus annual 20-F reports.
Arm's IPO used a Form F-1 registration statement, declared effective on Sep 13, 2023.[S6] Arm received no money from the IPO: its controlling shareholder sold the ADSs.[S6]
Where do you find ADR details in a filing?
The 20-F cover page. It names each class registered on a US exchange and what one ADS represents.[S6]
Form 20-F, Item 12.D. It asks for the bank's name, the shares behind one unit, voting and dividend procedures and every fee.[S2] In an annual report, the fees go in Item 12.D and the rest in an exhibit.[S2]
The exhibit index. Arm's lists the deposit agreement with Citibank, N.A., and a "Description of Securities".[S6]
Form 6-K. A foreign private issuer furnishes it promptly after making information public at home or filing it with a foreign exchange.[S3] Arm furnished its interim statements for the quarter ended Sep 30, 2026 on a 6-K on Nov 4, 2026.[S7]
Form F-6. Every ADR program is registered on it. It covers only the deposit terms, not the company.[S1]
What does an ADR not give you?
- A direct vote. Arm's 20-F says ADS holders may instruct the bank how to vote. Otherwise they have no vote unless they withdraw the shares.[S6]
- Fee-free ownership. Arm's 20-F lists fees of up to $5.00 per 100 ADSs, including an annual ADS services fee.[S6] The bulletin says banks often deduct custody fees from dividends.[S1]
- US-style reporting. A foreign private issuer files its 20-F within four months of its year end.[S2] Its securities are exempt from the SEC's proxy rules (Section 14(a)).[S4]
- Fixed terms. Arm's 20-F says it may amend or end the deposit agreement without ADS holders' consent. Holders get 30 days' notice of a change that is materially disadvantageous to them.[S6]
Can a company lose foreign private issuer status?
Yes. Rule 3b-4 tests the status on the last business day of the second fiscal quarter.[S5]
A company fails if US residents hold over half its voting securities and one more condition is met.[S5]
One example is a majority of executives or directors who are US citizens or residents. Another is a business run mainly from the US.[S5]
Arm's 20-F says losing the status would bring US domestic reporting rules from the next fiscal year.[S6]
How does Cityfort show an ADR?
The Arm page lists its ordinary shares, traded on Nasdaq as ADSs, in "Who owns it". The note there gives the ratio and how ADS holders vote.
Arm's fiscal year ends on Mar 31.[S6] Our entry on fiscal years that don't end in December explains how such periods are named.