How to sell foreign stocks

 FAQs
 

I have shares in ANZ Bank in Australia. I now live in the UK. What’s the easiest way for me to sell these shares?

Problems like this are by far the most common query I get from readers of this site. Many investors who have moved between countries or held shares in a company that was taken over by a foreign firm end up with small shareholdings in stocks listed in another country and aren’t sure how to get rid of them.

It sounds like it should be an easy question to answer, but it’s usually more awkward than you’d expect. The solution will depend on which country the shares are listed in, where the seller is resident and exactly how the shares are held.

This means it’s generally not possible to suggest a specific broker or outline the exact process, because details will vary from reader to reader. However, the basic principles will usually be the same, so this article will explain the steps you’ll need to follow to sell your overseas shares.

Know how your shares are held

The first stage is to be clear exactly how your shares are held. This may seem rather technical, but you can’t sell shares if you don’t know exactly where they are. You may remember that you had some shares in ANZ – but unless you can deliver these to your stockbroker, they have no proof of ownership and no ability to transfer the shares to a buyer, so they can’t carry out the sale for you.

So establishing what form your shares are in and who you need to contact to transfer them is crucial. There are a number of possibilities, many of which will depend on which country the shares are listed in and how you originally acquired them. The most common ones are:

  • In certificated form. This means that you have a physical paper certificate for the shares. This is becoming less common for shares purchased in the last decade or so, since most of the world began moving over to electronic settlement, but it will often apply for older holdings.
  • In dematerialised (electronic) form in your own name. Dematerialisation means that you don’t have a paper certificate, but you are recorded as the owner in an electronic register maintained by the company’s registrar or transfer agent. This is most likely to apply if you’ve deliberately chosen to hold shares in this way (for example, through the [LINK] Direct Registration System in the US), but can sometimes happen in ways that are less obvious – such as a company in which you held certificated shares being taken over by another company and existing shareholders being added to the electronic register instead of getting new paper certificates.
  • In a corporate sponsored nominee. Instead of your name appearing directly on the register, your shares are held on your behalf by a nominee company sponsored by the firm in which you hold shares. The nominee company is often managed by the company’s registrar. This is quite common if you’ve acquired the shares as a result of an employee stock option or stock grant plan.
  • In a nominee account with a stockbroker. This means that the recorded owner of the shares on the register of shareholders is the stockbroker that you used to buy them. The stockbroker then keeps records showing which of its clients has rights over all the shares held in its name. This is by far the most common way in which shares are bought in most markets today – see this article about stockbroker nominee accounts for more details – but not usually the way in which these leftover holdings will be held.
  • In a custodial account with a bank. This is similar to a stockbroker nominee account, in that the bank is the recorded owner of the shares and keeps records of which its clients are entitled to which holdings. This is relatively common with shares in some continental European countries, where many people buy and hold stocks through the banks.
  • In your own name in the central security depository (CSD) of the country where the shares are listed. You will have needed to open a personal account with the CSD and it’s unusual for private investors to do this in most countries. However, there are a handful of countries – such as Singapore – where it’s relatively common for residents to have their own account with the CSD.

The most frequent situation among investors who write into this site are old paper certificates, closely followed by dematerialised form with the registrar and corporate sponsored nominee. In many cases, people aren’t certain whether dematerialised shares are in their own name or in a corporate sponsored nominee – that usually doesn’t matter too much at this stage, because your contact will normally be the company’s registrar in both cases.

Know what you hold and who to contact

You may not know exactly which of these arrangements applies with your shares, but you can probably narrow it down with some detective work. The key questions to ask are:

  • Do you have a paper certificate? If so, this usually means your shares are in certificated form. However, with old certificates, it is possible that the company may have merged with another firm or been taken over, or that – in some countries – it has subsequently ceased using paper certificates and gone over to an electronic register. So you may need to contact the company’s registrar or transfer agent to establish what the position is.
  • Do you have an online account with a registrar or transfer agent where you can view details of your shareholding? This means a firm such as Capita IRG, Computershare and Equiniti in the UK, American Stock Transfer, Computershare (again) and Wells Fargo in the USA, or Advanced Share Registry Services, Boardroom P/L, Computershare (yet again), Link Market Services and Security Transfer Registrars in Australia. If so, your shares are probably in your own name in the electronic register or in a corporate sponsored nominee managed by the registrar on behalf of the company whose stock you hold. In this situation, your contact will be the registrar or transfer agent.
  • Do you receive statements from a stockbroker or bank with details of your holding or have an account with them where you can view details? If so, your shares are probably in a nominee or custodial account with the broker or bank and you should contact them if you need further information.
  • Do you have a personal account with the national central securities depository (CSD)? You might receive paper or electronic statements from the CSD or have an online account where you can view holdings. Major CSDs include CCASS in Hong Kong, Central Depository (CDP) in Singapore, CHESS in Australia and CREST in the UK. In most cases, investors will need to maintain an account with a broker (often referred to a sponsor) to have a personal account with the depository, so the broker rather than the depository will still usually be your contact. The main exception is Singapore, where the contact for investors who held their shares in a personal CDP account will normally be the CDP.

If you’re struggling to work out where your shares are held, try these steps:

  • Check the company’s website to find out who its registrar is. Then contact them to ask if you’re on the register of shareholders or if your shares are held in its corporate sponsored nominee.
  • If the company that you originally bought shares in has been taken over or has merged, you’ll need to contact the registrar or investor relations team at the successor company.
  • If you don’t seem to be on the register of shareholders or the records of the corporate sponsored nominee, that suggests your holding may be in a nominal or custodial account somewhere. Go through your records to see which stockbroker or bank you bought the shares through. Contact them to establish whether you still have an account with them and if the shares are held in custody in that account.

Once you know where your shares are, it’s a good idea to contact the relevant organisation – ie the registrar, custodian bank, stockbroker, or central securities depository – in any case, to check what your current entitlement is. Remember that a 20-year-old certificate stating that you own 1,000 shares in a company doesn’t necessarily represent your current entitlement: the details may have changed due to stock splits, stock consolidations, takeovers and mergers.

Apart from ensuring that your records are up to date, this also helps to ensure you have a contact and any relevant reference numbers if you need to transfer the shares to a broker in order to sell them. Once you’ve completed this stage, you should know all the details of your holding. The next step is to assess your options for selling international shares.

Consider your options

The easiest scenario will be if your shares are in a nominee account with a stockbroker or bank. It’s unlikely that many people reading this article will be in this position – if you hold your shares with a stockbroker, you usually know about it and simply choose to sell through them. But investors occasionally have old holdings in accounts that they’ve forgotten about. If so, selling through the broker or bank will usually be the simplest option and you should contact them initially.

If your shares are held as a paper certificate, in dematerialised form with your own name with the registrar or in a corporate sponsored nominee account, the registrar will sometimes provide a service to sell shares on your behalf – although unfortunately this won’t always be available to shareholders residents outside the country where the company is listed.

For an example of a service like this, see Royal Dutch Shell’s information pages on buying and selling its shares. The firm provides two dealing services, one through Equiniti, which is available to UK residents only, and one through ABN Amro which appears to have no residency restrictions.

If your company offers this service, check the investor relations section of their website for details. Contact the registrar or the company’s investor relations team for more information.

This won’t necessarily be the cheapest solution or most flexible solution, but it will usually be relatively straightforward. If this option is available and you want a quick, easy sale, it will usually be best to use this service.

Where neither of these situations apply, you will need to find a stockbroker who can sell the shares for you. There are three main options:

  • Use a broker in the country in which the shares are listed. This has one main advantage – transferring the shares from wherever they are currently held to the custody of this broker is likely to be relatively fast, simple and hopefully cheap or even free. The disadvantage is that opening an account with a broker overseas can sometimes be quite difficult and require a significant amount of paperwork. Citizens or residents of some countries – such as the US – may find it difficult or impossible to open accounts with brokers based in many countries. Meanwhile, brokers in some countries – notably the UK – are increasingly reluctant to deal with any non-residents.
  • Use a broker in the country where you are resident that can deal in the market where the shares are listed. The advantage of this is that opening an account is likely to be relatively straightforward. Other administrative issues such as transferring the proceeds of the sale from the broker to your bank account should also be quick and easy. On the other hand, transferring the shares into the custody of your broker may not be so simple – cross-border stock transfers involve more administration and can take several weeks or even a few months to complete. Brokers may charge to transfer-in overseas shares, even if they don’t charge for domestic transfers. What’s more, many firms may not be interested in carrying out one-off sales of foreign shares, especially if the shares are in certificated form – the potential complications may not seem worth their while.
  • Use a broker in a third country. This combines the disadvantages of both the first two options: The inconvenience of opening an account abroad together with the delays often caused by cross-border transfers. It will normally only make sense to do this if residency restrictions and difficulties finding brokers who can trade the market where your stocks are listed make it difficult to find an alternative.

Finding a suitable stockbroker may take quite a bit of searching, especially if you’re looking for broker in the country where the shares are listed rather than one in your home country. However, many stock exchanges have a list of. member brokers on their website and this can be a useful starting point. For example, if you need a broker in Australia, try the ASX’s find a broker tool.

Choose a broker

When contacting stockbrokers, registrars and other service providers, it’s important to be as specific about the details of your holding and what you are trying to do. You should try to include the following information:

  • What form the stock is held in. Some brokers may not be able to handle certificated foreign trades or may charge extra to do so.
  • State your country of residency and nationality. Some services may not be available to residents or citizens of all countries
  • Ask clearly about all costs, including dealing and stock transfer fees. Bear in mind that the proceeds of the sale, which will usually be in foreign currency, will ultimately need to be transferred to your bank account, so make sure you understand the currency conversion and money transfer charges.
  • Enquire about the timescales involved, especially when shares need to be transferred to a broker in another country. The broker may not be able to promise a specific deadline for cross-border transfers to be completed, but it’s useful to have a realistic schedule in mind.

Since the brokers available to you will depend on where you’re resident and what you want to sell, it’s not possible to provide a detailed list of brokers that will definitely help you sell foreign shares. Unfortunately, I’m unable to help research brokers on your behalf due to the number of these queries I receive. However, feedback from readers suggests the firms below may be worth investigating if they meet your requirements.

  • In the UK, traditional stockbrokers such as Redmayne Bentley (one of the few firms that specifically mention certificated overseas sales in their charges) and Charles Stanley have been reported to be more helpful in handling certificated sales of foreign stocks than most online discount brokers.
  • TD Direct Investing also appear to be willing to accept transfers in of international shares from many markets, both in certificated and electronic form. Details are listed here – note that transfer charges apply for most markets. Transfers apparently take a minimal of eight weeks.
  • HSBC InvestDirect Plus reportedly accepts or has accepted transfers in of US stocks in certificated form.
  • Hargreaves Lansdown apparently accepts transfers in of foreign stocks that can be held as Crest Depository Interests (CDIs). Other UK brokers that deal in international stocks as CDIs are likely to do so as well.
  • Readers resident in Canada have said they were able to sell foreign shares through banks such as HSBC.
  • Australian firm Open Markets has reportedly been helpful for investors outside the country who need to carry out one-off sales of Australian stocks.
  • If you need a US-based brokerage to sell US certificated shares, Lowtrades has been mentioned as willing to do this for non-residents, although they charge a relatively high fee ($125) to deposit a stock certificate.
  • Investors resident outside the UK looking for a UK broker to sell existing holdings may want to read the article on UK stockbrokers for non-residents.
  • For US residents looking to sell certificated holdings of foreign shares, both Charles Schwab and Fidelity have been mentioned as helpful in the past.

If you’ve been through the process of selling international shares and you have any additional information or broker recommendations that you think would help improve this article for other investors struggling with the same issue, please let me know using the contact form.