If those depository receipts are listed on non-us
stock exchange, then they will be called GDR.
It is denominate in US dollars or Euros.
Currently, the stock exchanges trading GDRs:
London Stock Exchange
Luxembourg Stock Exchange
Singapore Stock Exchange
Hong Kong Stock Exchange
How does GDR work?
• Let,1 ITC share in Indian market trades around Rs.
1000. Means 10 Euros.
• HSBC buys 100 shares of ITC and issues in the ratio
10:1 in foreign market .
• Means 1 GDR represents 10 ITC share, i.e. 100 Euros.
• Subsequent price is determined by market forces.
Which Indian Companies have
GDR listing requirement
• Admission to trading on a Recognized Stock Exchange.
• Transferability of the Underlying Shares &
GDRs: The shares underlying the GDRs as well as GDRs
itself must be freely transferable, fully paid and free
from any restrictions on transfer.
25% of the GDRs must be in public hands. This 25%
should not include any investor taking more than 5%.
• Market capitalization: The expected aggregate market
value of all GDRs to be listed must be at least £700,000.
Advantages provided by GDR
Helps investors to invest in foreign companies
Advantage of emerging market economies
Improves communication with share holders
More transparency and stability
Attracting foreign investors
Exposure in international market
Enhances company’s visibility, status and profile
Rise in capital