ADR and GDR conversion

Conversion of ADRs- and GDRs: This is how it works

Because of the present sanctions against Russian companies there is a high degree of uncertainty concerning private and institutional investments in so-called ADRs and GDRs. Anyone who does not exchange their depositary receipts for Russian companies into shares soon will be faced, in the worst-case scenario, with the total loss of their whole investment. But such an exchange currently presents enormous challenges. We of the international business law firm Goldenstein have therefore developed solutions for the existing problems and successfully support investors with the conversion of their DRs for Russian companies.

This is how investing in Russian ADRs and GDRs works

Russian shares may only be traded on the Moscow Stock Exchange. For this, however, investors require a depositary account in Russia. In order that investors from all over the world may nonetheless be able to invest in the Russian stock market via their domestic banks and brokers, many Russian companies launched so-called Depositary Receipt Programs in the past few years. Depositary receipts are receipts for shares that may be traded on international stock exchanges without any significant regulatory effort or expense.

Anyone who, in the past few years, has invested money in Russian companies from a base in Germany or any other country, has thus, in the normal case, purchased not Russian shares but such depositary receipts. In Europe it is essentially American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and, in part, also European Depositary Receipts (EDRs) that have been issued.

Until recently, such investments posed no challenges to investors. However, since the Russian war against the Ukraine and the western sanctions connected therewith, uncertainty prevails. This is because many Depositary Receipt Programs of major Russian companies such as Gazprom or Lukoil had to be stopped due to a new Russian law. DRs that have been issued must therefore be exchanged for shares within just a few months. This is currently not so simple, however.

Normally, the conversion of ADRs or GDRs to shares works as follows: the investor informs their broker or their bank that they wish to exchange their depositary receipts. This bank then approaches the European custodian of depositary receipts. This, in turn, passes this information on to the Russian custodian – the National Settlement Depositary (NSD). There, the deposited shares are then transferred to the Russian depositary account of the investor, which must be opened beforehand.

Until recently, the conversion of their depositary receipts was not attractive for international investors as the opening of a Russian depositary account involves a lot of bureaucratic effort for Europeans. The ending of many Depositary Receipt Programs now renders such an exchange indispensable, however. Due to the sanctions against Russian companies, this process is now also much more complicated than before.

These Russian Companies are ending their ADR and GDR Programs

In April 2022 Russia passed a law that is forcing many Russian companies to cease trading in depositary receipts within the coming months. The Russian legislator thus wishes to achieve that shares of Russian companies, in the future, are tradable only in Russia.

It is indeed the case that Russian companies still had the option of applying for the continuation of their Depositary Receipt Programs. But many companies did not exercise this option. So far it is only known that shares in the following companies will also be globally tradable in the future: Polyus, Tatneft, Severstal, Surgutneftegas, PhosAgrom, Sistema and Novatek.

Conversely, this also means that shares of major companies such as Gazprom, Magnit, Lukoil, Mobile TeleSystems, RusHydro, the LSR Group and the Federal Grid Company of Unified Energy System (FGC UES) will, soon already, only be tradable on the Moscow Stock Exchange. Partly this is already the case. Investors affected must therefore convert their depositary receipts to shares as quickly as possible. Otherwise, they risk the total loss of their own investment.

In fact, all conversion periods for Russian depositary receipt programs have already expired. Accordingly, the responsible banks will probably try to sell the deposited securities that have not been converted by their owners in a timely manner.

Fortunately, no case of such a forced sale has been reported so far. Therefore sometimes it is still possible to exchange depositary receipts for common shares again, although the respective ADR programs have already expired. However, it is completely unclear how long this will be the case. Therefore, affected investors should act quickly to protect their securities from forced sale.

In any case, if there were a forced sale of the deposited shares, many securities would come onto the market at the same time. This will most likely lead to enormous price slumps. While German investors must reckon with uncontrollable losses because of such a forced sale, investors from countries such as Russia or China could buy securites of German investors cheaply and benefit from the forced sale.

CompanyExpire date of the DR-program
Federal Grid Company of Unified Energy System (FGC UES)09/12/2022
LSR Group27/12/2022
Mobile TeleSystems13/01/2023

Chart 1: The deadlines for the conversion of depositary receipts of selected Russian companies

This is how the conversion of Russian Depositary Receipts works despite sanctions

In general, quick action is required when it comes to converting depositary receipts from Russian companies into shares. The conversion of Russian DRs is always only possible for a limited time and is also extremely complicated.

One of the reasons for this is that the European depository company for depositary receipts – Clearstream – has been refusing to initiate the conversion of Russian depositary receipts since summer 2022, citing alleged sanctions.

In this regard, on June 23, 2023, the European Commission provided legal certainty by amending EU Regulation 269/2014 to allow brokers, financial institutions and custodians to apply for authorization to exchange Russian ADRs. In the future, these institutes will enjoy legal certainty during the conversion process. Only applications relating to securities of sanctioned companies may be rejected. This does not include Gazprom, for example.

Therefore, the biggest challenge for affected investors is that some US issuers of Russian depositary receipts have closed their books. In this regard, there is currently good news, because J.P. Morgan, Chase Bank and BNY Mellon have recently reopened their books for the ADR programs of Magnet, Federal Grid Company (FGC UES), Cherkisovo, Inter RAO UES, Rosseti, PIK Group and Mobile Telesystems. In addition, Citibank recently announced that it would reopen the books for the Lukoil ADR program and a few smaller ADR programs.

And this is how it works:

Check, with the aid of our form, whether you can convert your ADRs or contact us directly by telephone on +49 331 200 57 20 or by e-mail to
We will examine your case at no cost to yourself and advise you with the best options for the conversion of your ADRs
We will support you, together with our partners, in the conversion of your depositary receipts. We shall thereby minimise your expenditure as far as possible.
Your ADRs have been converted to shares and your investment is no longer threatened with a total loss

The depositary receipts of Inter RAO, Rosseti and the Federal Grid Company cannot currently be converted into common stock due to sanctions imposed on these companies. For the other listed companies, however, the conversion is currently possible in principle and is also partially successful. In addition, it is very likely that the conversion of depositary receipts from companies such as Gazprom will also be possible again in the coming weeks.

However, since it is currently unclear when this will be the case, investors should at least collect all the documents needed to convert their securities in the traditional way because so far, the exchange has only been possible within a short time window. The commercial law firm Goldenstein advises affected investors in this regard free of charge and without obligation. We would be happy to help you to carry out the preparatory actions that are already possible in Russia in order to be able to use any exchange option that arises at short notice.

Questions and Answers

What are Depositary Receipts anyway?

Depositary receipts (DRs) are receipts issued for Russian shares. As Russian shares may only be traded on the Moscow Stock Exchange, many Russian companies have launched Depositary Receipt Programs. In the course of these, European and American credit institutions have taken Russian shares into custody and issued depositary receipts for them that were also tradable on western stock exchanges without any regulatory effort or expense.

Depending upon which stock exchange the Depositary Receipts are traded, these depositary receipts are designated as ADRs (American Depositary Receipts), GDRs (Global Depositary Receipts) and in part also as EDRs (European Depositary Receipts).

Must I convert my Russian DRs in every case?

Whether you must convert your Russian Depositary Receipts depends upon your own individual investments. Russian companies such as Norilsk Nickel or Tatneft have, for example, been granted special permits to continue their DR programs. In these cases, there is therefore no acute need for action. It has, however, already been confirmed that trading in the DRs of major companies such as Gazprom, Gazprom Neft, the Sberbank, Magnit, Lukoil, Mobile TeleSystems, RusHydro, the VTB Bank, the LSR Group and the Federal Grid Company of Unified Energy System (FGC UES) will be ended. Furthermore, more companies will most probably be added to this list. Affected investors must therefore have their depositary receipts converted into shares if they do not want to risk a forced sale and a total loss of their own investment.

Can I simply just keep my DRs?

Depositary receipts from companies whose DR programs end cannot be held for. The Russian DR programs expire at different dates and must be converted into common stock by then. Otherwise, they will be forcibly sold at a currently unknown price. After that it will no longer be possible to keep these DRs in your own depot. Otherwise, they will be forcibly sold at a currently unknown price.

However, good news for affected investors is that even securities from depositary receipt programs that have already expired can still be converted into common shares in some cases. However, it is unclear how long this will be the case. Therefore, quick action on the matter is required.

What will happen if I do not convert my Russian DRs?

If you do not convert your Russian Depositary Receipts to shares in time, the respective custodian bank will attempt to sell the share. Investors affected will then receive the respective sales proceeds minus any costs and fees incurred. However, it is currently unclear whether this will be possible, due to sanctions. Furthermore, even in the event of a sale, you are threatened with an enormous loss of value and, in the worst case, the total loss of your own investment. Finally, innumerable depositary receipts would then appear on the market at the same time. Investors from countries like China or Russia, on the other hand, would have the opportunity to benefit from the forced sale by buying up the securities from Western investors at low prices.

How much time I have to convert my Russian Depositary Receipts?

All conversion deadlines set by Russia have actually already expired. But the good news is that a forced sale of affected securities has not yet taken place and the conversion of depositary receipts into actual shares has still worked in some cases even after a DR program has expired. However, it is unclear whether and for how long this will still be possible. In addition, the conversion is further complicated in part by the fact that European banks, brokers and custodians are partially blocking the conversion process and some of the US issuers of the ADRs have closed their books.

There was good news in spring 2023: After American issuers reopened their books for some ADR programs, conversion applications for these programs have already been partially successful. It often didn’t even matter whether the respective DR program had actually already expired.

In addition, in June 2023, the EU Commission explicitly allowed brokers, financial institutions and custodians such as Clearstream to generally accept conversion applications relating to securities of non-sanctioned companies in future. Previously, the corresponding institutions had no longer accepted any corresponding conversion applications with reference to possible sanctions.

We at the Goldenstein business law firm support investors in carrying out this process successfully and advise them free of charge on what preparatory measures can currently be taken and how a conversion can be successful now or in the future.

Can I simply open a depositary account with a Russian bank and transfer my shares to that?

Opening a securities account with a Russian bank is currently associated with a great deal of effort for Europeans or European companies and sometimes even requires a local presence. We at the business law firm Goldenstein therefore help private and institutional investors to overcome these challenges together with our international partners in order to save European investments in the Russian market. We keep the effort as low as possible for our clients, so that, for example, no trips to Russia are necessary.

Am I free to choose the bank that will hold my Russian shares in future?

Currently, only a few Russian banks offer to open deposit accounts for foreigners from “unfriendly countries”. We can therefore only offer you a limited selection of institutes, but of course we will coordinate the choice with you in advance. There are currently no account opening or account management fees for corresponding securities accounts. This means that there are no additional costs for you.

I own DRs from various Russian companies. Can I transfer the deposited shares to one account?

The conversion of each class of ADR requires a separate conversion order to your bank. However, since we also verify the custody accounts opened in Russia for you, all classes of shares can be transferred to your custody account.

When can I expect the exchanged shares to be deposited into my account?

Experience has shown that the conversion takes about six to eight weeks. As soon as the conversion of your depositary receipts into actual shares has been successful, they are immediately in your Russian custody account. Since online banking functions for Russian custody accounts from Europe are often not currently possible, our local partners will fetch physical account statements for you on request, which we will be happy to send to you as a digital scan or, if you wish, in paper form.

Can I sell the converted shares immediately via my new custody account?

Dividends will be paid into a clearing account opened for you by us. A payment of the dividends to a German account or an account in the EU is not possible for the time being due to the existing sanctions. It is also currently not possible to predict when these options will be available again. However, the dividends paid out are collected on the respective clearing account until payment is possible and desired again.

Will I receive dividends again after the conversion?

Dividends are paid out to the new clearing account at the respective custodian bank. However, the payment of dividends to a German bank account or an account in the EU is not possible for the time being due to the existing sanctions. It is also currently not possible to predict when these options will be available again. However, the dividends paid out are collected on the respective clearing account until payment is possible and desired again.

A separate application is currently required for the payment of dividends. Support with this is also part of our service portfolio.

What does the exchange do for me if I have to hold the converted shares afterwards?

By converting your depositary receipts into actual shares, you can decide for yourself if and when you want to sell your securities. If you do not convert, the shares behind your DRs will be sold by the issuing bank on the open market as soon as the respective conversion period has expired and trading is possible again. Since at this time masses of shares from the respective companies will probably come onto the market, there is a high probability of massive price losses. But if you have converted your DRs, you can sell your shares when the price has recovered. Alternatively, you can of course also hold your shares, for example to benefit from dividend payments.

Does the commercial law firm Goldenstein also offer an exchange of DRs from companies whose DR programs have been extended?

We also support you in the conversion of Russian DR classes whose DR program has not been terminated, provided they are not affected by sanctions and conversion is currently possible.

I possess ETF with Russian shares. Do I have to convert these investments also?

No. Anyone who has invested in ETF with Russian shares need not concern themselves with anything at the present. In this case it is the ETF provider who is responsible for examining the conversion of Russian Depositary Receipts and, if need be, for implementing the same.

Must I transfer the ownership of my shares for conversion to third parties?

No. We of the business law firm Goldenstein will help you to rescue your investments in Russian Depositary Receipts without needing to transfer these to third parties. Together with our international partners, we will open a depositary account for you and take care of the conversion of your DRs to shares. We shall thereby be charging a fee only for our expenses.

Has the commercial law firm Goldenstein already successfully converted their clients’ depositary receipts into shares?

Yes. Together with our partners, we have already mastered the conversion of our clients’ depositary receipts many times over. However, we cannot give a conversion guarantee, since the requirements for a successful conversion change regularly. Of course, we react immediately to corresponding changes and, in this case, develop new solutions for our clients. You also benefit from the fact that half of our legal fees are only due once your securities have been successfully converted.

Does the commercial law firm Goldenstein work together with Deeland Investments?

No. Deeland Investments has used texts from our website without our consent and sometimes even communicated on behalf of our firm. There is no cooperation between us and Deeland Investments and we reserve the right to take legal action.