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Global Registered Share (GRS)

Definition

A Global Registered Share (GRS) is a type of security that gives investors the ability to own shares of foreign-based companies in their own market and currency. The shares are traded, cleared, and settled in the investor’s home market similar to other securities. This facilitates international trading by removing barriers like currency exchange concerns and different trading regulations.

Phonetic

The phonetics of “Global Registered Share (GRS)” are: Global – /ˈɡloʊ.bəl/Registered – /ˈrɛ.dʒɪ.stərd/Share – /ʃɛər/GRS – /ˌdʒi: ɑ:r ˈɛs/

Key Takeaways

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  1. Global Registered Shares (GRS) represent a mechanism that allows companies to issue shares in multiple countries simultaneously. This allows firms to expand their investor base and gain access to different capital markets.
  2. GRS can be listed and traded on different exchanges in various currencies, making them flexible and easily accessible to international investors. However, companies issuing GRS must comply with the regulatory requirements of each country where the shares are listed.
  3. Another crucial aspect of GRS is that they are technically identical to regular registered shares, providing shareholders the same voting rights and dividend privileges. The key difference lies in their registration, which is done globally rather than in a specific country.

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Importance

Global Registered Shares (GRS) play an essential role in the business/finance world, primarily as they enable corporations to broaden their investor base globally. These shares are denominated in different currencies and are tradable in various global markets, thus eliminating the typical hurdles associated with cross-border trading such as currency conversion or adherence to varying regulations. This flexibility paves the way for increased international investments, brings more liquidity to corporations, facilitates access to larger capital markets and potential investors worldwide. Therefore, GRS becomes a considerable advantage for many businesses looking to raise capital and expand their enterprises globally.

Explanation

Global Registered Share (GRS) has been specifically designed to aid multinational corporations that cross-list their shares on multiple exchanges across various countries. Typically, when corporations list in different countries, they have to handle separate pools of shares for each, dealing with different regulations, currencies, and entities to manage and clear those shares. The purpose of GRS is to transcend these complications, allowing corporations to maintain a single, consolidated registry of shares irrespective of the country in which they are traded.GRS is a pioneering effort to bring uniformity to the trading and ownership of shares in global markets. It offers organisations increased operational efficiency and more straightforward compliance with regulations, as they do not have to navigate a patchwork of local practices. Simultaneously, it benefits investors who wish to diversify their portfolios internationally. They can trade in GRS in their local market, without the hassle of dealing with foreign exchange, tax implications, or dealing with unfamiliar trading and settlement practices, thus providing a streamlined process for investing in foreign equities.

Examples

1. Nestlé: Back in July 2005, Nestlé made use of Global Registered Share (GRS). Applying GRS allowed Nestlé to have shareholders from around the world with the convenience of holding their shares in their domestic market and denomination. The shares were quoted and traded in Swiss Francs and the issuing took place in Switzerland, but the GRS could be traded both in Swiss Francs and US dollars, allowing more global accessibility.2. Novartis: Novartis, a Swiss multinational pharmaceutical company, implemented Global Registered Shares to simplify their capital structure. This widened their potential investor base by making it easier for individual and institutional investors around the world to acquire their shares.3. Roche Holding AG: This Swiss multinational healthcare company introduced Global Registered Shares as a way of adapting to the changes in international securities markets, making it easier for foreign and local investors to buy and sell their shares. The shares can be transacted in the local currency and are fully fungible, meaning each unit is capable of mutual substitution.

Frequently Asked Questions(FAQ)

What is a Global Registered Share (GRS)?

A Global Registered Share (GRS) is a type of security that allows a company’s shares to be traded on multiple stock exchanges around the world. It facilitates international investors to deal in company shares in their local currency and trading practices.

Why do companies use GRS?

Companies often use GRS to expand their investor base internationally. By making their shares more accessible to investors globally, they can potentially increase liquidity in their stock and raise capital more efficiently.

How does a Global Registered Share work?

A GRS works by being listed on multiple stock exchanges across different countries. This means investors in these countries can buy and sell the GRS in the local currency, during local trading hours and in accordance with local trading practices.

Are there any risks associated with investing in GRS?

Yes, investing in GRS carries its own set of risks. These can include exchange rate risk, where changes in the value of the foreign currency relative to the investor’s domestic currency can affect the value of the investment. There is also the risk of changes in foreign laws and regulations, as well as general political and economic instability in the foreign country.

Where can I buy Global Registered Shares?

Global Registered Shares can be purchased on any stock exchange where they are listed. This can include major global exchanges such as the New York Stock Exchange, London Stock Exchange, or Tokyo Stock Exchange among others.

Can I sell my Global Registered Shares on any exchange?

Yes, owners of GRS can sell their shares on any exchange where the shares are listed, regardless of where they initially purchased the shares.

Do I need a special account or broker to trade in GRS?

No, typically you do not need a special account or broker to trade in GRS. However, it’s always best to check with your broker or financial advisor for the specific requirements of trading in foreign securities.

Related Finance Terms

  • International Securities Identification Number (ISIN): This is a unique code that identifies a specific securities issue and is important in Global Registered Shares (GRS).
  • Cross-Listing: This concept is closely tied to GRS, as they are listed and traded on more than one stock exchange.
  • Depositary Receipt (DR): A bank-issued certificate representing shares in a foreign company traded on a domestic stock exchange, closely tied to how GRS are handled.
  • Securities and Exchange Commission (SEC): GRS, like all securities, are regulated by this United States entity.
  • Foreign Exchange Rates: These rates are important in GRS as they affect the price of shares listed and traded in different countries.

Sources for More Information

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