This document provides an overview of American Depository Receipts (ADR) and Global Depository Receipts (GDR). It defines ADRs and GDRs, describes their key features and differences. ADRs represent shares of a foreign company trading on American markets, allowing US investors to purchase shares in non-US companies. GDRs represent shares of a foreign company trading globally. The document outlines the types and levels of ADRs and GDRs, and provides examples of major Indian companies that issue ADRs and GDRs to access international capital markets.

1. PRESENTED
BY:
Gaurav Kumar
GLA University
MBA
ADR & GDR

2. TABLE OF CONTENTS
• DEPOSITORY RECEIPTS
• AMERICAN DEPOSITORY RECEIPTS (ADR)
• ADVANTAGES OF ADR
• Types of ADR
• LEVELS OF ADR
• GLOBAL DEPOSITORY RECEIPTS (GDR)
• DIFFERENCE BETWEEN ADR & GDR
• EXAMPLES OF ADR & GDR

3. Depository receipts

4. Depository receipts
• issued by international depositories (ODB),
• Held by a domestic custodian on behalf of
the depositories
• Traded on Stock Exchanges in the US,
Singapore, Luxembourg, London, etc

5. AMERICAN DEPOSITORY RECEIPTS
• ADR is a dollar-denominated negotiable certificate.
It represents a non-US company’s publicly traded
equity. It was devised in the late 1920s to help
Americans invest in overseas securities and to assist
non-US companies wishing to have their stock
traded in the American Markets.
• ADR were introduced as a result of of the
complexities involved in buying shares in foreign
countries and the difficulties associated with trading
at different prices and currency values.

6. ADVANTAGES OF ADR/GDR
• Can be listed on any of the overseas stock
exchanges /OTC/Book entry transfer system.
• Freely transferable by non-resident.
• They can be redeemed by ODB.

7. Types of ADR
SPONSORED ADR UNSPONSORED ADR
Issued with cooperation of the
company whose stock will
underlie the ADR
Issued by – broker/dealer or
depository bank without the
involvement of company whose
stock underlies the ADR
Comply with regulatory
reporting.
No regulatory reporting
Listing on international Stock
Exchanges allowed.
Trade on OTC market

8. Levels of ADR
• Level 1- Level 1 depositary receipts are the lowest level of
sponsored ADRs that can be issued. When a company issues
sponsored ADRs, it has one designated depositary who also
acts as its transfer agent.
• Level 1 shares can only be traded on the OTC market and the
company has minimal reporting requirements with the U.S.
Securities and Exchange Commission [SEC].
• Level 1 ADRs essentially enable a company to obtain the
benefits of a US publicly traded security without altering their
current reporting process.

9. • Level 2- Level 2 depositary receipt programs are more complicated
for a foreign company. When a foreign company wants to set up a
Level 2 program, it must file a registration statement with the U.S.
SEC and is under SEC regulation.
• The advantage that the company has by upgrading their program to
Level 2 is that the shares can be listed on a U.S. stock exchange.
These exchanges include the New York Stock Exchange (NYSE),
NASDAQ, and the American Stock Exchange (AMEX).

10. • Level 3- A Level 3 American Depositary Receipt program is the highest
level a foreign company can sponsor. Because of this distinction, the
company is required to adhere to stricter rules that are similar to those
followed by U.S. companies.
• Foreign companies with Level 3 programs will often issue materials that are
more informative and are more accommodating to their U.S. shareholders
because they rely on them for capital

11. GLOBAL DEPOSITORY RECEIPTS
• A bank certificate issued in more than one country
for shares in a foreign company. The shares are held
by a foreign branch of an international bank. The
shares trade as domestic shares, but are offered for
sale globally through the various bank branches.
• A financial instrument used by private markets to
raise capital denominated in either U.S. dollars or
Euros.
• The voting rights of the shares are exercised by the
Depository as per the understanding between the
issuing company and the GDR holders.

12. Types of GDR
• Rule 144A GDRs
• Rule 144A GDRs are privately placed depositary
receipts which are issued and traded in
accordance with Rule 144A. This rule was
introduced by the SEC in April 1990 in part to
stimulate capital raising in the US by non-US issuers.
• Non-US companies now have ready access to the
US equity private placement market and may thus
raise capital through the issue of Rule 144A GDRs
without complying with the stringent SEC
registration and reporting requirements.

13. • Regulation S
• With the global integration of the major securities
markets, it is now commonplace to have fungible
securities listed and cleared in more than one
market.
• Just as ADRs allow non-US issuers to access the
important US market, GDRs allow issuers to tap the
European markets.

14. DIFFERNCE BETWEEN ADR & GDR
ADR GDR
American depository receipt
(ADR) is compulsory for non –us
companies to trade in stock
market of USA.
Global depository receipt (GDR) is
compulsory for foreign company
to access in any other country’s
share market for dealing in stock.
ADRs can get from level 1 to level
III.
GDRs are already equal to high
preference receipt of level II and
level III.
ADRs up to level –I need to
accept only general condition of
SEC of USA.
GDRs can only be issued under
rule 144 A after accepting strict
rules of SEC of USA .
ADR is only negotiable in USA . GDR is negotiable instrument all
over the world
Investors of USA can buy ADRs
from New york stock exchange
(NYSE) or NASDAQ
Investors of UK can buy GDRs from
London stock exchange and
luxemberg stock exchange and invest
in Indian companies without any extra
responsibilities .

15. WHICH INDIAN COMPANIES HAVE ADR & GDR
COMPANY ADR GDR
Bajaj Auto No YES
Dr Reddy’s YES YES
HDFC Bank YES YES
ICICI bank YES YES
ITC NO YES
L&T NO YES
MTNL YES YES
HINDALCO NO YES
INFOSYS
TECHNOLOGIE
S
YES YES
TATA MOTORS YES NO

16. COMPANIES ADR GDR
PATNI COMPUTERS YES NO
SBI NO YES
WIPRO YES YES
VSNL YES YES

17. THANK YOU