Aviva 2013 Annual Report Download - page 311

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
309
Shareholder information continued
Risks related to ownership of the ADSs and
ordinary shares
The trading price of our ADRs and dividends paid on our
ADSs may be materially adversely affected by fluctuations in
the exchange rate for converting sterling into US dollars.
An ADS is a negotiable US security representing ownership in
one share. An ADR is denominated in US dollars and represents
ownership of any number of ADSs. ADRs are publicly traded
shares in a non-US corporation, quoted and traded in US dollars
in the US securities market. Any dividends are paid to investors
in US dollars. ADRs are specifically designed to facilitate the
purchase, holding and sale of non-US securities by US investors.
The term ADR is often used to mean both the certificates and
the securities themselves.
Fluctuations in the exchange rate for converting pound
sterling into US dollars may affect the value of our ADRs.
Specifically, as the relative value of the pound sterling against
the US dollar declines, each of the following values will
also decline:
 the US dollar equivalent of the pound sterling trading price
of our ordinary shares on the London Stock Exchange which
may consequently cause the trading price of our ADRs in the
US to also decline
 the US dollar equivalent of the proceeds that a holder of
our ADSs would receive upon the sale in the UK of any our
ordinary shares withdrawn from the depositary and
 the US dollar equivalent of cash dividends paid in pound
sterling on our ordinary shares represented by our ADSs.
The holders of our ADSs may not be able to exercise their
voting rights due to delays in notification to, and by, the
depositary.
The depositary for our ADSs may not receive voting materials for
our ordinary shares represented by our ADSs in time to ensure
that holders of our ADSs can instruct the depositary to vote
their shares. In addition, the depositary’s liability to holders of
our ADSs for failing to carry out voting instructions or for the
manner of carrying out voting instructions is limited by the
Deposit Agreement governing our ADR facility. As a result,
holders of our ADSs may not be able to exercise their right to
vote and may have limited or no recourse against the depositary
or us, if their shares are not voted according to their request.
Holders of our ADSs will have limited recourse if we or the
depositary fail to meet our respective obligations under the
Deposit Agreement.
The Deposit Agreement expressly limits our obligations and
liability and those of the depositary. Neither we nor the
depositary will be liable if either of us:
 are prevented from or delayed in performing any obligation
by circumstances beyond our/their control
 exercise or fail to exercise discretion under the Deposit
Agreement or
 take any action based upon the advice of, or information
from, legal counsel, accountants, any person presenting
ordinary shares for deposit, any person in whose name the
ADSs are registered on the books of the depository, any
person or entity having a beneficial interest deriving from
the ownership of ADRs, or any other person believed by us
or the depositary in good faith to be competent to give such
advice or information.
In addition, the depositary has the obligation to participate in
any action, suit or other proceeding with respect to our ADSs
which may involve it in expense or liability only if it is
indemnified. These provisions of the Deposit Agreement will
limit the ability of holders of our ADSs to obtain recourse if we
or the depositary fail to meet our obligations under the Deposit
Agreement or if they wish to involve us or the depositary in a
legal proceeding.
The holders of our ADRs in the US may not be able to
participate in offerings of rights, warrants or similar
securities to holders of our ordinary shares on the same
terms and conditions as holders of our ordinary shares.
In the event that we offer rights, warrants or similar securities
to the holders of our ordinary shares or distribute dividends
payable, in whole or in part, in securities, the Deposit
Agreement provides that the depositary (after consultation with
us) shall have discretion as to the procedure to be followed in
making such rights or other securities available to ADR holders,
including disposing of such rights or other securities and
distributing the net proceeds in US dollars to ADR holders.
Given the significant number of our ADR holders in the US, we
generally would be required to register with the SEC any public
offering of rights, warrants or other securities made to our ADR
holders unless an exemption from the registration requirements
of the US securities laws is available. Registering such an
offering with the SEC can be a lengthy process which may be
inconsistent with the timetable for a global capital raising
operation. Consequently, we have in the past elected and may
in the future elect not to make such an offer in the US,
including to our ADR holders in the US, and rather only conduct
such an offering in an ‘offshore’ transaction in accordance with
‘Regulation S’ under the US Securities Act of 1933, as amended
(the ‘Securities Act’). Therefore, there can be no assurance that
our ADR holders will be able to participate in such an offering in
the same manner as our ordinary shareholders.
The ADR and ordinary share price of Aviva has been, and may
continue to be volatile.
The share price of our ADRs and ordinary shares has been
volatile in the past and the share price and trading volume of
our ADRs may continue to be subject to significant fluctuations
due, in part, to changes in our actual or forecast operating
results and the inability to fulfill the profit expectations of
securities analysts, as well as to the high volatility in the
securities markets generally and more particularly in shares of
financial institutions. Other factors, besides our financial results,
that may impact our share price include, but are not limited to:
 market expectations of the performance and capital
adequacy of financial institutions in general;
 investor perceptions of the success and impact of our
strategies;
 a downgrade or review of our credit ratings;
 potential litigation or regulatory action involving Aviva or
sectors we have exposure to through our insurance and
fund management activities;
 the operations, accounting practices or regulatory
investigations, and share price performance of other
companies in the insurance and fund management markets
in which we operates; and
 conjecture about our business in the press, media or
investment communities.