adr and gdr

1. Depository Receipts
Presented by:
Avanthika
Ashwini
Niawkor
Ranjita
Jelin

2. Depository Receipts
• Negotiable Financial Instrument issued by bank to represent a
foreign company’s publicly traded securities.
• Traded on Stock Exchanges in the US, Singapore , London and
Luxemburg etc.
• Types of DR
i. GDR
ii. ADR
iii. IDR

3. GDR-Global Depositary Receipt
• GDR is a certificate issued by a depository bank, which
purchases shares of foreign company.
• Shares trade as domestic shares.
• Listed and traded in the stock exchange.
• GDRs are liquid because they are based on demand and
supply which is regulated by creating or cancelling shares.

5. Advantage provided by GDR
Investor’s advantage
• Helps investors to invest in foreign companies
• Emerging market economies
• Improves relationships with share holders globally
• More transparency and stability

6. Issuer’s advantage
• Attracts foreign investors
• Exposure in international market
• Rise in capital

7. ADR- American Depository Receipts
• Introduced by JPMorgan in 1927
• A negotiable certificate issued by a U.S bank
• Represents a specified number of shares of a foreign
company
• ADRs are denominated in U.S dollars.

8. Types of ADR
Unsponsored :
• Created in response of investors, brokers, dealers and depository
• Traded on the Over the counter market
Sponsored :
• Initiated by issuer
• Agreement between Issuer and Depository
• Through Depository ADR holders can exercise voting rights

9. a) Level -I
• Least expensive
• Capital raising is not permitted
b) Level –II
• More expensive
• listed on National exchange of US
c) Level –III
• Most expensive
• Capital can be raised through Public offering

10. Private Placement( Rule 144A)
• Capital can be raised by placing depository receipts with large
institutional investors
• Known as a restricted ADRS.
• Sale is made to only QIBs.

11. ADR vs GDR
ADR
• Centre- NYSE
• Disclosure- Requires
comprehensive disclosure
• GAAP- Company accounts must
reconciled to US GAAP
• Cost- Comparatively higher
• Retail- US retail market can be
accessed
• Liability – Legal Liability is more.
GDR
• LSE
• Only detailed information required
• Satisfied with statement of
difference between the A/ c
standards
• Comparatively lower
• Only Qualified Institutional Buyers
allowed in US
• Comparatively less than ADR