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American Depositary Receipts (ADRs) and D&O Insurance– Willis Towers Watson Latest Report

American Depositary Receipts (ADRs) provide a way for U.S. investors to own stocks which are not directly traded on the U.S. stock exchanges. It has long been understood that companies (and their directors and officers) which support the issuing of ADRs (called “sponsoring”) can be exposed to securities class actions in the U.S. in connection with the sale of the ADRs.

However, it is possible for ADRs to be issued without being sponsored and a recent U.S. decision, Stoyas v. Toshiba Corp., has raised the prospect that even companies which don’t sponsor the issuing of ADRs can still be the subject of U.S. securities class actions.

Prior to the Toshiba case, unsponsored ADRs were generally believed to have no U.S. securities law exposure for the underlying securities issuer. The Toshiba case has an obvious and significant potential impact on the way in which insurers will evaluate the D&O risk of any company whose stocks are traded in the ADRs.

Further details on ADRs and how they operate, as well as a summary of the Toshiba case can be found in the report.

For further information contact:

Angus Duncan

Executive Director – Coverage Specialist, Global FINEX

Direct: +44 20 3124 8386


To read the full Report follow the link above.




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