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Global Depositary Receipt (GDR)


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Global Depositary Receipt (GDR)

  1. 2. Group Members <ul><li>PRESENTATION </li></ul><ul><li>GDR </li></ul><ul><li>BY </li></ul><ul><li>ANEEQ AHMED (BB-1-05-2574) </li></ul><ul><li>SHAIKH FAIZAN AHMED (BB-1-05-2820) </li></ul>
  2. 3. WHAT GDR IS
  3. 4. ?
  4. 5. What is GDR ? <ul><li>It is a Derivative. </li></ul><ul><li>Use as a global finance vehicle </li></ul><ul><li>This instrument provides access to a broad investor base spread across various continents </li></ul><ul><li>Certificate created by the Overseas Depository Bank out side the Pakistan. </li></ul><ul><li>If it is issued in America then it is called ADR. </li></ul><ul><li>Pakistan Telecommunication (Sep 1994) was the first company to raise funds through a GDR issue. </li></ul>
  5. 6. GDR S …… <ul><li>The GDRs were issued in the US to Qualified Institutional Buyers (QIBs) under Rule 144A, and outside the US under Regulation S. </li></ul><ul><li>Normally 1 GDR = 10 Shares </li></ul><ul><li>Its a negotiable instrument denominated in dollars or some other freely convertible currency. </li></ul>
  6. 7. <ul><li>Why we need GDR </li></ul><ul><li>? </li></ul>
  7. 8. Use of GDRs <ul><li>Financing of Capital Goods Import </li></ul><ul><li>Capital Expenditure </li></ul><ul><li>Investment in software development </li></ul><ul><li>Prepayment </li></ul><ul><li>Scheduled repayment of earlier external borrowings </li></ul><ul><li>Equity investment in JV/WOSs . </li></ul>
  8. 9. <ul><li>The GDR's are usually listed at the Luxembourg Stock Exchange as also traded at two other places besides the place of listing e.g. on the OTC market in London and on the private placement market in U.S.A. </li></ul>Where GDR’s are traded?
  9. 10. Listing Requirement <ul><li>Minimum public free float of 25% </li></ul><ul><li>Minimum market value of at least $100000. </li></ul><ul><li>Three years operating history. </li></ul><ul><li>The full list of continuing obligations </li></ul><ul><li>Annual report and accounts published as soon as possible </li></ul><ul><li>Half yearly reports are published as soon as possible. </li></ul>
  10. 11. Benefits of using GDR
  11. 12. Advantages provide by GDR <ul><li>Two folded </li></ul><ul><ul><ul><ul><li>Investor's Advantages </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Issuer’s Advantages </li></ul></ul></ul></ul>
  12. 13. Contd….. <ul><li>Issuer’s Advantages: </li></ul><ul><li>Attraction for Foreign Investor. </li></ul><ul><li>Exposure in International Capital Market. </li></ul><ul><li>Tap into the wealthy European/North American equity markets. </li></ul>
  13. 14. Contd….. <ul><li>Investor’s Advantages: </li></ul><ul><li>Easy and cost effective. </li></ul><ul><li>Reducing administration. </li></ul><ul><li>Avoiding foreign taxes on each transaction. </li></ul>
  14. 15. <ul><li>How GDR is issued and cancelled? </li></ul>
  15. 16. <ul><li>Standard Standard </li></ul><ul><li>Issuance Cancellation </li></ul>Investors Foreign Broker Local Broker Local Broker Foreign Broker Investors Local Market Local Custodian Depository International Stock Exchange Deposit shares Sell Shares Buy Shares Issued GDR Cancel GDR Release Shares Conformation Instruction