A:

There is no law that prevents Canadians from participating in direct stock purchase plans offered by U.S. companies. There are also no laws preventing Canadians from participating in dividend reinvestment plans (DRIPs) offered by U.S. companies. However, if these plans interest you, be advised that the U.S. company in question must allow foreign participation in the direct stock purchase plan or DRIP in order for you to participate.

Pfizer (NYSE: PFE) has both a dividend reinvestment plan and a direct share purchase plan, and at the time of writing (January 2006), it allowed Canadian residents to participate in both of these programs. Non-U.S. citizens should be certain that participation in a U.S. company's direct share purchase plan or its DRIP does not violate U.S. law or the laws of their home country. It is impossible to check every international law regarding share purchase, but laws that could potentially be violated include those involving matters of local and international tax, foreign currency exchange, stock registration, foreign investment, money laundering, trade embargos, and so on.

If you are in doubt about your government's regulations governing participation in direct share purchase plans or DRIPs in a particular country, you should contact your respective taxation authority and any other government bodies concerned. To find out whether a company has a direct stock purchase program or a DRIP that allows foreign participation, check with the company's investor relations department, shareholder services agent or transfer agent.

For more information, read The Perks Of Dividend Reinvestment Plans and What is a DRIP?

RELATED FAQS
  1. How can I purchase stocks directly from a company?

    There are a few circumstances in which a person can buy stock directly from a company. The following is meant to cover some ... Read Answer >>
Related Articles
  1. Investing

    The Perks Of Dividend Reinvestment Plans

    These plans offer shareholders a way to directly invest in some of the top companies without the commissions.
  2. Investing

    6 Reasons Why Dividends Should Be Reinvested

    Learn about the advantages of dividend reinvestment programs and how they may benefit longer-term investors who want to build a position in a company.
  3. Investing

    5 Ways to Lose Money With a Dividend Reinvestment Plan

    Enrolling in a dividend reinvestment plan can backfire if you're not using it wisely, costing you money in the process.
  4. Investing

    How Dividend Reinvestment Grows Your Money Faster

    Dividend reinvestment is a smart strategy for growing your investments faster over the long term, but it’s not a get-rich-quick proposition.
  5. Retirement

    Should Retirees Reinvest Their Dividends?

    Find out why dividend reinvestment may or may not be the right choice for retirees, depending on their financial needs and investment goals.
  6. Investing

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  7. Investing

    Got Dividends? Here's How to Reinvest Them

    Reinvesting dividends is almost always a good idea if you intend to hold your shares for the long term, and there are several ways to do it.
  8. Financial Advisor

    401(k) Rollovers: The Tax Implications

    The tax rules for 401(k) rollovers can be simple or more complex, depending on which path you take.
RELATED TERMS
  1. Dividend Reinvestment Plan - DRIP

    A plan offered by a corporation that allows investors to reinvest ...
  2. Treasury DRIP

    A dividend reinvestment plan that uses dividends to purchase ...
  3. Drip Marketing

    A strategy employed by many direct marketers where a constant ...
  4. Foreign Plan

    A retirement savings plan created by a person or a company to ...
  5. Distribution Reinvestment

    A process whereby the distribution from a limited partnership, ...
  6. Direct Purchase Program

    A direct purchase program is a method by which individuals can ...
Hot Definitions
  1. Dow Jones Industrial Average - DJIA

    The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange ...
  2. Revolving Credit

    A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is ...
  3. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
  4. Contango

    A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation ...
  5. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  6. Acid-Test Ratio

    A stringent indicator that indicates whether a firm has sufficient short-term assets to cover its immediate liabilities. ...
Trading Center