Legal Definitions - American share

An American share refers to a share of a company's stock that is traded on a stock exchange within the United States. This term is often used specifically to describe the underlying shares of a foreign company that are made accessible to U.S. investors through an American Depositary Receipt (ADR). ADRs are certificates issued by U.S. banks that represent ownership of a certain number of shares in a foreign company, allowing U.S. investors to buy and sell these shares on U.S. exchanges without directly engaging with foreign markets or currencies.

• Investing in a Foreign Retailer: An American investor wants to purchase stock in a popular German clothing retailer. Instead of opening a brokerage account in Germany and dealing with foreign currency exchange, the investor buys an American Depositary Receipt (ADR) for that company on the New York Stock Exchange (NYSE). Each ADR represents a specific number of the German company's shares, which are held by a U.S. bank. These underlying shares, made available for trading in the U.S. via the ADR, are considered American shares.
• Global Pharmaceutical Company Listing: A large pharmaceutical company based in Switzerland decides to expand its investor base by listing its stock directly on the NASDAQ stock exchange in addition to its primary listing in Zurich. U.S. investors can now purchase these shares directly on a U.S. exchange. The shares bought and sold on NASDAQ are referred to as American shares, distinguishing them from the shares traded on the Swiss exchange.
• Domestic Tech Startup's IPO: A burgeoning technology startup headquartered in California successfully completes its Initial Public Offering (IPO) and lists its common stock on the NYSE. When individual investors or institutions purchase shares of this company through their U.S. brokerage accounts, they are acquiring American shares because these shares are issued by a U.S. company and are traded on a U.S. stock exchange.