US investors FAQ
Frequently Asked Questions
As a non-US company, investors in the United States have utilized the Roche ADR program since 1992. Here are answers to some of the most frequently asked questions from investors:
How can I invest in Roche?
For an investor in the United States, a position in Roche can be acquired through an American Depositary Receipt (ADR) traded on OTCQX International Premier under the symbol RHHBY.
Why can't I invest directly in Genentech?
On March 26, 2009, Genentech, Inc. became a wholly-owned member of the Roche Group and ceased trading on the New York Stock Exchange. US investors interested in investing in the Roche Group or Genentech can learn more here about Roche’s U.S.-dollar denominated American Depositary Receipt or ADR (ADR stock symbol: RHHBY).
What is the relationship between Genentech and Roche?
The Roche Group maintains its competitive advantage by focusing on developing medically differentiated therapies and diagnostics in areas of high unmet global healthcare need. It also focuses on improving patient health outcomes and generating business success by working with patient communities around the world to expand market access to its innovative therapies.
With the combined global strengths from Roche and Genentech in biotechnology, pharmaceuticals and diagnostics, the Group is better equipped than any other company to further drive personalized healthcare. When genetic differences can be identified, the efficacy and safety of medicines can be improved enormously. The combined strengths of the company also provide it with the ability to handle the scale, complexity and the flexibility necessary to operate in a dynamic market environment.
As part of a 2009 merger agreement, Roche and Genentech combined their pharmaceutical operations in the United States, and Genentech’s South San Francisco campus now serves as the headquarters for Roche’s US pharmaceutical operations in North America. Genentech Research and Early Development continues to embrace the spirit of a “startup” and operates as an independent R&D center within Roche.
American Depositary Receipts (ADRs)
Download the Roche ADR Backgrounder for more information.
What are ADRs?
American Depositary Receipts (ADRs) are dollar-denominated securities that represent ownership of equity in non-U.S. companies. ADRs can be bought or sold through a U.S. registered broker-dealer. They trade, clear and settle like any U.S. shares and are held in U.S. custody.
What are the benefits of ADRs?
ADRs allow U.S. investors to seamlessly trade in non-U.S.-based companies through U.S. registered broker-dealers. This permits investors to diversify their portfolios with stakes in numerous well-known, blue-chip companies.
Dividends are paid in U.S. dollars, and a depositary bank handles a dividend tax reclaim process, typically reducing the dividend tax to the U.S. level (with the actual tax rate depending on the investor’s individual circumstances).
Global custodian safekeeping fees are eliminated when holding ADRs, which usually make holding ADRs less expensive. J.P. Morgan Chase is Roche’s depositary bank.
What is the make-up of Roche's ADR?
Roche’s ADR is on the OTCQX International Premier under the symbol RHHBY. Currently, eight ADRs represent one underlying non-voting equity security. The Roche ADR facility was initiated in 1992 when one ADR represented one hundredth of one underlying non-voting equity security. The current ADR ratio is a result of several splits and ratio changes.
Are ADRS unique to Roche?
No. There are thousands of other non-U.S. companies that have ADRs trading on U.S. secondary markets, including well-known global issuers. The number of foreign blue-chip stocks in the OTCQX International Premier market has grown significantly and includes well-known multi-national companies such as Adidas, Danone, Fiat, Heineken, Siemens and Volkswagen, as well as Roche. Blue-chip companies not based in Europe that trade on the OTC market include Hitachi, Mitsubishi, Nissan, Panasonic and Takeda Pharmaceuticals. For a list of companies with ADR programs, please go to www.adr.com.
How can I buy and sell Roche ADRs?
Institutional and individual investors can trade Roche ADRs - or have them issued or canceled - through a U.S. registered broker-dealer.
What is the OTCQX International Premiere?
The OTCQX International Premier is a U.S. market for companies already listed on a qualified international stock exchange. OTCQX International Premier provides global companies listed on international exchanges access to U.S. investors, and allows them to distribute information in the U.S. public markets without the duplicative complexity of a U.S. exchange listing.
Companies on the OTCQX use their home country disclosure in English in lieu of the U.S. Securities and Exchange Commission (SEC) reporting. This ensures that only companies already approved by a qualified international stock exchange’s listing process are eligible and that they meet the highest international financial standards. Standards for OTCQX are aligned with margin eligibility standards set by the Federal Reserve and the SEC.
What are the market hours for the trading of OTCQX securities?
Trading in OTCQX, OTCQB and OTC Pink securities may take place Monday-Friday from 6:00 AM to 5:00 PM (Eastern). The majority of quoting and trading occurs between the open market hours of 9:30 AM to 4:00 PM (Eastern); however, market participants are free to quote and trade at any time as long as they comply with current regulations (e.g., FINRA Best Execution). For updates on holidays and hours, click here.
How liquid are Roche ADRs?
The liquidity of stocks on the OTCQX International Premier is strong. In fact, in 2018, the average daily trading volume in Roche ADRs exceeded 1.6 million. It should be noted that the supply of Roche ADRs is not limited to their US trading. Through J.P. Morgan, Roche’s depositary bank, registered broker-dealers can have ADRs issued or cancelled when an investor wishes to acquire or dispose of them. Accordingly, ADR liquidity is generally equivalent to that of the underlying securities traded in the issuer’s home market.
Do ADRS have price transparency?
Concerns about price transparency and other issues have been alleviated and real-time trading data for ADRs is typically available.
What is the role of Roche's depositary bank?
As Roche’s depositary bank, J.P. Morgan issues and cancels Roche’s ADRs, serves as transfer agent, maintains the register of ADR holders, helps reclaim Swiss withholding taxes on cash dividends for ADR holders, and distributes dollar-denominated dividends to ADR holders.
What is an administrative fee?
The deposit agreement underpinning Roche's ADR program states that the depositary bank is able to collect a fee from ADR holders to cover the administrative costs of running the ADR program. The fee is applied to each ADR held by an investor upon record date.
Why has the administrative fee been set at $0.03?
This has been determined between J.P. Morgan and Roche. In order for the fee to be acceptable to the investment community it needs to fall within certain parameters so that the “cost” of buying into the ADR is not prohibitive. The calculation typically used to gauge the cost involves dividing the proposed fee by the ADR price, with the resulting number falling between 0-50 basis points. Using Roche’s 12 month average ADR price, the cost would be $0.03 / $31.04 = 10 basis points.
Both J.P. Morgan and Roche are sensitive to the needs of shareholders with risk and reputation at the forefront of everything we do. J.P. Morgan’s business practice committee has set the 50 basis point guideline suggesting any fee-to-price ratio lower than this is acceptable.
How and when is the fee collected by J.P. Morgan?
The fee is based on the record date balance (due to be Wednesday November 1st). The record date is determined by J.P. Morgan and the US settlement system (the DTC) collects the fees from each individual broker. For example, if an institution holds 10,000 ADRs at the close of business on the record date, they will be charged $300 (10,000 ADRs * $0.03). The institution will see the pending charge on the following business day. Their account with the DTC will be debited during their normal billing cycle which is typically by the 10th day following the month of the record date. The brokers themselves are responsible for charging the beneficial owners of the ADRs if they decide to pass the charge on.
How frequently will the fee be charged?
The administrative fee will be charged annually and at approximately the same time of the year.
How are ADR holders notified of the fee (and/or changes to the Deposit Agreement)?
When fees are intended to be charged by a depositary bank in relation to an ADR program, the depositary bank has an obligation, on behalf of the issuer, to inform the registered ADR holders that a fee is scheduled to be charged. This is done by way of a market announcement which is published on the DTC’s Legal Notice System where brokers can search for notices by company name, CUSIP or a key word. In certain instances, changes may also have been made to the deposit agreement underpinning an ADR program and any such changes are required to be disseminated to ADR holders 30 days before the changes become effective.
We would recommend ADR holders contacting their broker for further information on this matter.
Investing in Roche
What is the usual tax rate on dividends?
Dividends are subject to the Swiss withholding tax of 35% at the time of initial payment. Roche depositary bank J.P. Morgan performs a tax reclaim process with Swiss tax authorities. While the actual dividend tax rate paid depends on the tax status of the ADR holder, the net dividend assumes a 15% tax rate, plus a dividend reclaim and payment fee of $0.0275 per ADR.
Does Roche offer a dividend reinvestment program?
In 2010, Roche initiated a dividend reinvestment program to all registered ADR holders through its depositary bank J.P. Morgan Chase. The plan allows ADR holders to reinvest all or part of their dividends to buy additional ADRs. For more information on the Roche dividend reinvestment program, please go to http://www.roche.com/drp_brochure.pdf.
Where can I get more information about the dividend payment process?
To obtain more information about the Roche ADR dividend payment schedule and tax-reclaim process, please visit the Dividend Payment FAQ here.
Where can I find information about the dividend history?
How can I get printed copies of the annual report and other publications?