PTX

Investors in US-based fuel cell company Protonex (PTX:AIM) may soon find the shares becoming a lot easier to trade. At present the stock can only be settled outside of the Crest settlement system, meaning they have to be held in paper form.

Share certificates put off institutional investors and this can be seen by the thin trading. In September, for instance, 30,000 shares traded, less than 0.1% of the shares. But by the middle of this month it’ll be possible to settle a portion of the company’s shares in Crest.

The significance of settling in Crest, Euroclear UK & Ireland’s settlement platform, is that the shares can be held electronically and Protonex chief executive Scott Pearson expects this to have a big impact: ‘This will make investing in the company more attractive and could improve liquidity.’

Due to its classification in the US as a ‘Regulation S’ share, American transfer regulations mean that Protonex can’t be admitted into Crest. But those shares issued more than two years ago are allowed in. Of Protonex’s 65 million shares, 26% are now more than two years old – these will be separated out and traded under the PTXU code.

Once allowed into Crest, share certificates in a foreign company can be converted into depository interests (DIs). Electronic records held within the Crest system, a DI can be traded and settled at the push of a button.

A DI is not like owning the share itself, rather it is an ‘interest’ in the underlying stock. But the owner of the DI retains ‘full economic rights’ including rights to receive information from the company, income distributions like dividends, and to vote at general shareholders’ meetings.

by: Simon Keane