A convertible bond or preference share can be turned into ordinary equity at a set ratio, in a window or at maturity. Conversion is voluntary until it is forced (a hard call, or an automatic convert). The new shares need a new ticket, a new ISIN if they are not yet fungible, and a book-cost roll from the bond. Silence leaves the bond outstanding. That is the voluntary default, and it is not a later booking.
Two US distribution rails show up constantly on international convertibles. Rule 144A paper is sold to qualified institutional buyers — typically institutions with at least $100 million in securities. Regulation S paper is sold offshore, outside the US registration regime. The two lines can trade under different ISINs until they season. Delivering one into a settlement obligation for the other is a fail even when the coupon and the ratio look identical.
ADRs add a depositary between the holder and the local share. Creating an ADR over UK stock attracts 0.5% SDRT. Dividends arrive in US dollars. A bonus changes the ADR ratio rather than sending a fraction of a receipt. Holders typically have no vote, and on a rights issue the depositary sells the rights and remits cash. The receipt is the product; the local share is what the depositary holds.
Atlantic Horizon's Cayman sleeve is the usual home for a convertible. The offering document can hold restricted paper that an Irish UCITS may not want, or may not be allowed, to own. State Street still sends the MT564; the manager still has to elect before the agent cut-off; Dublin still books the Cayman NAV even though the product is not an Irish UCITS. Conversion spends the bond and, sometimes, a cash top-up. No instruction, and the bond remains a bond.
Atlantic Horizon UCITS ICAV is more likely to meet the equity end of the same story. It can hold Thames Industrial plc ordinary in CREST, or a Nippon Industrials KK ADR in DTC, while the Cayman sleeve holds the convertible that exchanges into one of those lines. The house that already reuses one custodian still has three instruments: the bond, the local share, and the receipt. They are not fungible just because they talk about the same issuer.
Notice, ratio, cash top-up, and whether conversion is into existing shares or a new issue all have to sit in the golden copy before anyone elects. Partial conversion leaves a residual bond; full conversion kills the ISIN. Accrued coupon to the conversion date may or may not be paid — read the terms, do not assume. Dublin cannot outsource that reading, or the final NAV stamp, on the Irish UCITS that holds the resulting equity.
Restricted lines are a delivery problem disguised as a legal memo. 144A, Reg S, ordinary, and ADR each have an ISIN. State Street will not make them one position because the economics rhyme. The election is which line you want to own; the settlement is whether you actually own it. A cash top-up on conversion is still a dual-controlled debit; a lazy assumption that "the bond just becomes stock" is how ICAV cash leaves without a ticket.