Guilder Shares (New York Shares)
Guilder shares—also known as New York Shares—were a historical mechanism that allowed Dutch companies to provide tradable equity to U.S. investors at a time when the Netherlands prohibited foreign trading of shares listed on its national exchanges.
What they were
A Guilder share represented an ownership stake in a Dutch company that could be traded in the United States. Because Dutch law once prevented shares listed on Netherlands exchanges from being traded abroad, a company (or its depository agent) would cancel a number of shares on the Dutch markets and reissue equivalent shares that could be listed on the New York Stock Exchange (NYSE). Those reissued shares were called Guilder or New York Shares.
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How they worked
- Dutch-listed shares that were to be offered in the U.S. were first canceled in the Netherlands.
- Equivalent shares were then aggregated and issued for trading on a U.S. exchange, allowing American investors to buy into the Dutch company without dealing directly with Dutch exchanges or settlement systems.
- This arrangement was a workaround to national restrictions on cross-border trading of quoted securities.
Why they disappeared
Changes in international securities practice and the acceptance of American depositary receipts (ADRs) for Dutch companies made Guilder shares unnecessary. ADRs provide a simpler, standard way for U.S. investors to buy foreign stocks without the need to cancel and reissue domestic listings.
ADRs today
An American depositary receipt (ADR) is a negotiable certificate issued by a U.S. depositary bank that represents a specified number of shares (often one) of a foreign company’s stock. ADRs trade on U.S. exchanges like domestic shares and offer benefits to both sides:
– U.S. investors gain easy access to foreign companies with trading and settlement in familiar markets.
– Foreign firms can attract U.S. capital without directly listing on U.S. exchanges.
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Many Dutch companies now use ADRs or trade over-the-counter (OTC) in the U.S., making the old Guilder-share approach obsolete.
Key takeaways
- Guilder (New York) shares were a historical method for bringing Dutch company equity to U.S. markets when direct foreign trading was restricted.
- The process involved canceling shares in the Netherlands and reissuing them for U.S. listing.
- ADRs now serve the same purpose more efficiently, so Guilder shares are no longer used.
Fast fact: the guilder was the name of the Dutch national currency before the Netherlands adopted the euro.