The Power Point Presented in Financial Market Instrument Class Seminars at Teresian College. It highlights the GDR Meaning, definitions, working mechanism, and features.

1. Post Graduate Department of Commerce
Teresian College
Capital Market Instrument
GDR and Its features
M.Com 1st
Lecturer : Ms. Kreeti
Presented by: Kazim Ehsan
Date: February 2, 2020

2. Table of Content:
Introduction
Definition of GDR
How GDR Mechanism Works
Feature of GDR
Conclusion

3. Introduction
A Global Depositary Receipt (GDR) is a bank
certificate or depository receipt issued in more than
one country for shares in a foreign company. GDR is
used to raise funds and investment from foreign
investors.

4. Definition of GDR
 Global Depository Receipt (GDR) is an instrument in
which a company located in domestic country issues one
or more of its shares or convertibles bonds outside the
domestic country.
 In GDR, an Overseas Depository Bank (ODB) on behalf
of a company, issues shares of the company to residents
outside the domestic territory. Such shares are in the
form of depository receipt or certificate issued by bank.

5. How GDR Mechanism Works
Global Depository Receipt
(GDR)
The company issuing GDRs hands over
its shares to one Domestic Custodian
Bank (DCB).
The DCB requests the Overseas Depository
Bank (ODB) situated in the foreign country for
issuing the shares as GDR.
The ODB converts the shares shown in
rupees into GDR which are denominated in
US dollars.
Finally, ODB issues them to the intending
investors.

6. Features of GDR
1. It is a negotiable instrument and can be traded freely like any other
security.
2. Indian companies with sound financial track of three years are
readily allowed to access international financial markets through
GDR. However clearances are required from the Foreign
Investment Promotion Board (FIPB) and the Ministry of Finance.

7. Features of GDR…
3. GDRs are issued to investors across the country. It is denominated in
any acceptable freely convertible currency.
4. GDR is denominated in any foreign currency but the underlying
shares would be denominated in local currency of the issuer.
5. The holder is entitled to dividend and bonus on the value of shares
underlying the GDR.

8. Features of GDR…
6. The investor can convert GDR into equity shares, and sell the
shares mentioned in the GDR through a local custodian. This
provision can be used after 45 days from the date of issue.
7. Under GDR, the issuing company transacts with only one entity
for all its transactions.

9. Conclusion
Issue of Global Depository Receipt is one of the most popular ways
to tap the global equity markets. A company can raise foreign
currency funds by issuing equity shares in a foreign country.

10. References:
 Investopedia :
https://www.investopedia.com/terms/g/gdr.asp
E-FinancialManagement:
https://efinancemanagement.com/sources-of-
finance/global-depository-receipt
Brainkart: https://www.brainkart.com/article/Global-
Depositary-Receipt-(GDR)-and-its-Features_34958/

11. The End…
Thank You!