ADR Overview
Gulf Keystone Petroleum has had an American Depositary Receipt (“ADR’s”) programme in the United States since December 2008.
Programme Information
On 5 December 2008 the Company established a sponsored Level 1 American Depositary Receipt ("ADR") programme in conjunction with the Bank of New York Mellon (www.bnymellon.com), which has been appointed as the depositary bank.
Details of the listing are as follows:
OTC Market Tier: OCTQX
Ticker Symbol: GFKSY
CUSIP: 402312102
Ratio: 1:20 (1 GKP ADR represents 20 GKP ordinary shares)
ADR Depository
GKP’s depository is the Bank of New York Mellon and any general questions about the ADR programme can be directed to them at:
BNY Mellon Shareowner Services
PO Box 358516
Pittsburgh
PA 15252-8516
Toll free telephone number (if calling from within the USA): 1-888-269-2377
International callers can call: +1 201 680 6825
Email: shrrelations@bnymellon.com
Website: http://www.adrbnymellon.com/
Trading
Further information on GKP’s ADR listing can be found at http://www.otcqx.com
ADR Frequently Asked Questions
What is an American Depositary Receipt?
American Depositary Receipts (“ADRs”) are negotiable securities that generally represent a non-US company's equity shares.
ADRs facilitate purchases by US investors of non-US securities and allows GKP, as a non-US company, to have stock traded in the United States. Depositary Receipts typically trade, settle and clear in the same manner as securities local to the market on which they are trading, alleviating certain obstacles and expenses associated with cross-border investing.
How are ADR’s issued?
GKP’s ADRs will be issued or created when you contact your broker to make a purchase. The broker, through its own international offices or through a local broker in GKP's home market, purchases the actual ordinary shares and requests that the shares be delivered to the custodian bank (The Bank of New York Mellon).
The broker who initiated the transaction will convert the US dollars received from you into the corresponding foreign currency and pay the local broker for the shares purchased. On the same day that the shares are delivered to the custodian bank, the custodian notifies the depositary bank. Upon such notification, ADRs are issued and delivered to the initiating broker, who then delivers the ADRs to you.
How does an ADR trade?
Once ADRs are issued, they are tradable in the United States and, just as with any other US security, they can be sold to other investors. When an ADR is sold to another US investor and the existing ADR is simply transferred from one ADR holder (seller) to another ADR holder (buyer), it is known as an intra-market transaction. An intra-market transaction is settled in the same manner as any other US security purchase: in US Dollars on the third business day after the trade date and typically through a Depository Trust Company.
How are ADRs sold and cancelled?
When you want to sell your ADRs, you should notify your broker. The broker can either sell the ADRs in the US market through an intra-market transaction or sell the shares outside of the US, typically into the home market, through a procedure known as a cross-border transaction. In cross-border transactions, brokers, either through their own international offices or through a local broker in the home market, will sell the shares back into the home market. In order to settle the trade, the U.S. broker will surrender the ADR to the depositary bank with instructions to deliver the shares to the buyer in the home market. The depositary bank will cancel the ADR and instruct the custodian to release the underlying shares and deliver them to the local broker who purchased the shares. The broker will arrange for the foreign currency to be converted into U.S. dollars for payment to you.
How does the market price the ADRs?
Once ADRs are issued and there are an adequate number of ADRs outstanding in the US market (usually 3% to 6% of the company's shares in ADR form) a true intra-market trading market emerges. Until this market develops, the majority of ADR purchases result in ADR issuances resulting from the deposit of shares. When executing an ADR trade, brokers seek to obtain the best price by comparing the ADR price in US dollars to the dollar equivalent price of the actual shares in the home market.
The continuous buying and selling of ADRs in either market tends to keep the price differential between the local and US markets to a minimum. As a result, a significant majority of ADR trading is done in the form of intra-market trading and does not involve the issuance or cancellation of an ADR.
What is the Deposit Agreement and how is it relevant to me, as an ADR holder?
Because the Bank of New York Mellon will actually hold the ordinary shares held in the form of ADRs, you must rely on it to exercise your rights as a shareholder. The obligations of The Bank of New York Mellon are set out in the deposit agreement among us, The Bank of New York Mellon, and you, as an ADR holder. Copies of the deposit agreement will be available for inspection at the corporate trust office of The Bank of New York Mellon, which is located at 101 Barclay Street, New York, New York 10286. The offices of The Bank of New York Mellon, as custodian, is located at One Canada Square, London E14 5AL and The Bank of New York Mellon's principal executive office is located at One Wall Street, New York, New York 10286.
If you are an ADR holder, you must rely on the procedure of your broker or other financial institution to assert your rights as an ADR holder. You should consult with your broker or financial institution to find out what those procedures are.
Can I purchase ADRs directly from Gulf Keystone?
No.
