How much does the American Depository Receipt (ADR) cost for Sony stock (SNE)?

Question

I am a resident of USA and want to invest in Sony (SNE), a Japanese stock. My brokerage says I can only do this through an ADR. According to Charles Schwab:

American Depositary Receipts (ADRs) are negotiable securities issued by a bank that represent shares in a non-U.S. company. These can trade in the U.S. both on national exchanges and in the Over-The-Counter (OTC) market, are listed in U.S. dollars, and generally represent a number of foreign shares to one ADR. This gives U.S. investors exposure to foreign equities without having to trade on a local exchange in the local currency. Investors can trade ADRs during the U.S. market sessions.

My brokerage only claims on average the ADR fee is 3 cents per share. It made no comment on the frequency of such fees. How would I find the exact cost and frequency for Sony in particular? I'm just making sure it's not some huge amount that can slowly drain on my investment.

Answer 1

For Sony Corporation ADR (NYSE: SNE), the depositary bank is Citibank, N.A. (reference)

According to the Fee Schedule of the Deposit Agreement (See Exhibit B-1 at the end of the document), fees may be charged for:

• Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements)
  • Fee: Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) held
  • Paid by: Person to whom distribution is made (i.e. you)
• ADS Services
  • Fee: Up to 5.00 U.S. dollar per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the Depositary
  • Paid by: Person holding ADSs on the applicable record date(s) established by the Depositary (i.e. you)

According to the agreement, these are the maximum amounts that the depositary bank is allowed to charge. There are more fees listed in the Deposit Agreement (for stock dividends, rights issues, spin-off shares, etc.), so you should read the document carefully. The fee schedule is also reproduced in yearly filing of SEC Form 20-F (link: 2019 filing of Form 20-F).

In practice (I could be wrong, so you will need to double-check), for this particular ADR, Citibank only charges fees by subtracting from dividends. It appears to charge a 10% Cash Dividend Fee, a Tax Relief at Source (TRS) Fee, and it withholds tax before the remaining amount is given to you. On the Company Dividends / GDN Interest Payments page, you can see the history of dividends along with the fees and taxes deducted from the dividends.

Since this is an ADR sponsored by Sony, you should call Sony's investor relations department to get accurate information about ADR fees.