Foreign registrar: Overview, definition, and example
What is a foreign registrar?
A foreign registrar is a third-party entity or organization responsible for managing and maintaining records of securities issued by a company in a foreign jurisdiction. The foreign registrar handles administrative tasks such as the registration of shareholders, issuance of certificates, and the processing of stock transfers for securities that are issued outside of the company’s home country. The foreign registrar is often involved in managing the shareholder list, ensuring compliance with local securities regulations, and facilitating communication between the company and its international investors.
For example, a U.S.-based company may issue shares of stock in a European market. To manage these shares, the company would hire a foreign registrar based in Europe to handle the registration of those shares and ensure the proper records are kept.
Why is a foreign registrar important?
A foreign registrar is important because it ensures that the registration and transfer of securities in foreign markets are handled in accordance with the legal and regulatory requirements of that jurisdiction. Having a foreign registrar simplifies the process of managing international securities and ensures compliance with foreign securities laws. It also provides a convenient and reliable means of maintaining accurate shareholder records and facilitating investor communications, especially for companies with a global shareholder base.
For companies, having a foreign registrar ensures that their securities are properly managed and that they are complying with the regulatory requirements of the foreign market. For international investors, a foreign registrar ensures that their shares are properly recorded, that their rights are protected, and that they receive timely information and dividends related to their investments.
Understanding foreign registrar through an example
Imagine a technology company based in the U.S. that decides to list its shares on a stock exchange in London to attract international investors. The company hires a foreign registrar located in the UK to manage the registration of its shares for UK-based investors. The foreign registrar is responsible for maintaining the list of shareholders, issuing new stock certificates to investors, processing transfers of stock, and ensuring that all transactions comply with UK securities regulations.
In another example, an Australian mining company issues bonds in Japan to raise capital for an expansion project. The company uses a foreign registrar based in Tokyo to manage the bondholder records, process interest payments, and ensure that all bond transactions comply with Japanese securities law.
An example of a foreign registrar clause
Here’s how a foreign registrar clause might appear in an agreement:
“The Company agrees to appoint [Foreign Registrar Name] as the foreign registrar for the securities issued in [Country Name]. The Foreign Registrar shall be responsible for maintaining the shareholder register, processing stock transfers, issuing share certificates, and ensuring compliance with the applicable securities regulations in [Country Name].”
Conclusion
A foreign registrar plays a key role in ensuring that a company’s securities issued in foreign markets are properly managed and compliant with local laws. By handling tasks like shareholder registration, stock transfers, and regulatory compliance, foreign registrars simplify the process for companies with international investors and markets. For investors, they provide an essential service in ensuring their holdings are accurately recorded and their rights are protected under the laws of the foreign jurisdiction.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.