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. What is the difference between preference and ordinary shares?

    Learn about the main differences between preference and ordinary shares including how dividends are paid for both types of ...
  2. What is the difference between a green field and a brown field investment?

    Read about the advantages and disadvantages of pursuing green field or brown field investments in the foreign direct investment, ...
  3. How do companies identify and manage business risk?

    Learn what risks businesses can be exposed to during any phase of the business life cycle, and how these risk can be identified ...
  4. How reliable or accurate is marginal analysis?

    Learn why predictive marginal analysis is limited by human knowledge and reason, but reflective marginal analysis can always ...
RELATED TERMS
  1. Value Of Risk (VOR)

    The financial benefit that a risk-taking activity will bring ...
  2. Business Judgment Rule

    A legal principle which grants directors, officers, and agents ...
  3. Back Pay

    The amount of salary and other benefits that an employee claims ...
  4. Contingent Commission

    A commission with a value dependent on an event occurring, and ...
  5. Collection Commission

    The percentage of premiums that an agent is owed for collecting ...
  6. Separation Of Powers

    An organizational structure in which responsibilities, authorities, ...

You May Also Like

Related Articles
  1. Stock Analysis

    Today's Top ETFs: Worth a Bet or Should ...

  2. Charts & Patterns

    Are These the Top 3 Value Stocks of ...

  3. Mutual Funds & ETFs

    Top Foreign Debt ETFs & Funds for Diversification

  4. Investing News

    Cost-Free Connection Of Target Groups ...

  5. Investing News

    A New Corporate Governance Initiative ...

Trading Center