Pros and Cons of Redomiciling vs. Cross-Listing


The basics of dual listings and cross-listing

The short explanation is that dual listing or cross-listing results in listings on two or more stock exchanges. On the other hand, redomiciling involves moving the domicile, or home country, of a company to the other country, which also enables it to switch from one country’s stock exchange to another.

One example of a company that has cross-listed is U.K.-based Unilever, which was listed in London (ULVR) and then cross-listed in Amsterdam (UNA), with a third ADR listing in the U.S. (UL). However, American Depository Receipt shares are not actual shares.

Instead, they’re certificates issued by a bank that represent a foreign company’s stock and can trade on an exchange without the company actually being registered on that exchange. Of course, being able to trade on a foreign exchange without actually having to register on it offers clear benefits for companies, but those advantages are beyond the scope of this article.

On the other hand, cross-listed companies still have to meet the same requirements as any other stock trading on the exchange they want to trade on, which typically include various regulatory and accounting requirements, among others. Additionally, cross-listed companies must abide by all the regulations established by each stock exchange on which they are listed.

“Foreign companies that desire to leverage the U.S. capital markets need to evaluate the level of engagement and thus commitment to our regulations, which are amongst the most stringent worldwide, that they are willing to undertake,” explained Louis Taubman, a partner at the law firm Hunter, Taubman Fischer & Li, LLC. “There is no right or wrong answer in this regard. It is really a matter of balancing the needs of each individual company and its shareholders with the costs and benefits of the options (i.e., dual and cross-listing or redomiciling) available.”

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