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GLOBAL 
DEPOSITORY 
RECEIPT 
By Manisha Joshi
It is a form of depository receipt or certificate 
created by the overseas Depository bank outside 
India, denominated in ...
 GDR is a negotiable instrument denominated in US 
Dollars. 
 It is traded in Europe or the US or the both. 
 After get...
 The depository then issues dollar denominated 
depository receipts or GDR against the shares 
registered with it. 
 Gen...
MERITS OF GDR ISSUE 
 Less issue formalities. 
 Less administrative works as regards dividend 
payment, information diss...
 Besides issuing companies, 
foreign investors especially, FIIs also get advantage of 
investing in the Indian companies ...
Global depository receipt
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Global depository receipt

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Global depository receipt

  1. 1. GLOBAL DEPOSITORY RECEIPT By Manisha Joshi
  2. 2. It is a form of depository receipt or certificate created by the overseas Depository bank outside India, denominated in dollar and issued to non-resident investors against the issue of ordinary shares or FCCB of issuing company. FCCB - a quasi debt instrument which is issued by any corporate entity, international agency or sovereign state to the investors all over the world.
  3. 3.  GDR is a negotiable instrument denominated in US Dollars.  It is traded in Europe or the US or the both.  After getting approval from the Ministry of Finance and completing other formalities,  a company issues rupee denominated shares in the name of the depository  which delivers these shares to its local custodian bank, the holder on records, thus depository.
  4. 4.  The depository then issues dollar denominated depository receipts or GDR against the shares registered with it.  Generally, 1 GDR = 1 or more (rupee denominated) shares.  It is traded like any other dollar denominated security in the foreign markets, in addition to equity financing (as GDR represents equity) over debt financing.
  5. 5. MERITS OF GDR ISSUE  Less issue formalities.  Less administrative works as regards dividend payment, information dissemination, AGM etc. as the issuer deal only with a single shareholder, the depository.  Easy availability of foreign exchange  No foreign risk.
  6. 6.  Besides issuing companies, foreign investors especially, FIIs also get advantage of investing in the Indian companies without getting registration with SEBI,  Relief from cumbersome settlement and Delivery procedures.  Adequate liquidity (as GDR is as liquid as the shares of the company in its home market) and generally higher returns.  In fact, GDR holders enjoy all economic benefits of the underlying shares  But none of the corporate rights like right to vote.

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