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ADR, GDR & IDR 
1
DEPOSITORY RECEIPTS 
2 
 Depository receipts are instruments issued by international depositories (ODB), 
and they represent an interest in the underlying shares held by them in the 
issuer company (Indian Company). The shares are usually held by a domestic 
custodian on behalf of the depositories in turn issue the depository receipts, 
which entitle the holder of the receipts to get the underlying shares on 
demand. 
 DRs are traded on Stock Exchanges in the US, Singapore, Luxembourg, London, 
etc. 
 DRs listed and traded in US markets are known as American Depository Receipts 
(ADRs) and those listed and traded elsewhere are known as Global Depository 
Receipts (GDRs). In Indian context, DRs are treated as FDI.
ININTTEERRNNAATTIOIONNAALL C CAAPPITITAALL M MAARRKKEETT 
ININTTEERRNNAATTIOIONNAALL B BOONNDD M MAARRKKEETT ININTTEERRNNAATTIOIONNAALL E EQQUUITITYY M MAARRKKEETT 
EURO 
BOND 
EURO 
BOND 
FOREIGN 
BOND GGDDRR AADDRR 
FOREIGN 
BOND 
3
AMERICAN DEPOSITORY RECEIPTS 
4 
 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 the complexities involved in buying shares 
in foreign countries and the difficulties associated with trading at different 
prices and currency values.
Process to Issue ADR/GDR 
Issuing Company 
(RIL) 
Foreign 
Depository 
(Morgan Stanley) 
Clearing Agency 
(Euro Clear) 
Domestic 
Custodian bank 
(SBI) 
GDR/ADR Holders 
(Bank Of America) 
Foreign Stock 
Exchange 
(NYSE) 
Share 
Certificate 
Confirmation 
Issue of DR 
Payment 
Dividend 
5
Advantages Of ADR/GDR 
6 
 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. 
 The ODB should request DCB to get the corresponding underlying shares 
released in favor of non resident of investors. (Shareholders of issuing 
companies).
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 
7
Levels of ADR 
8
Level 1 ADRs: 
9 
 Level 1 ADRs are the lowest level of sponsored ADRs and also the simplest 
method for companies to access the US capital markets. 
 Level 1 ADRs are traded in the over-the –counter (OTC) market. 
 The issuing company does not have to comply with US generally accepted 
accounting principles (GAAP) or provide US Securities and Exchange 
Commission (SEC) disclosure. 
 Level 1 ADRs essentially enable a company to obtain the benefits of a US 
publicly traded security without altering their current reporting process. 
 Companies that have level 1 ADRs may upgrade to level II or level III ADR 
program. 
 They require minimal SEC registration.
Level II ADRs: 
10 
 Level II ADRs enable companies to list their ADRs on Nasdaq, the American 
Stock Exchange, the New York Stock Exchange and the OTC bulletin board, 
thereby offering higher visibility in the US market, more active trading and 
greater liquidity. 
 Level II ADRs require full registration with the Securities and Exchange 
Commission. Companies must also meet the requirements of the 
appropriate stock exchange. 
 Level II ADRs require a form 20-F and form F-6 to be filled with the SEC, as well 
as meeting the listing requirements and filing a listing application with the 
designated stock exchange. Upon F-6 effectiveness and approval of the 
listing application, the ADRs begin trading.
Level III ADRs: 
11 
 level III ADRs enable companies to list their ADRs on Nasdaq, the Amex, the 
NYSE or the OTC Bulletin Board and make a simultaneous public offering of 
ADRs in the united states 
 The benefits of level III ADRs are substantial; it allows the issuer to raise capital 
and leads to much greater visibility in the U.S market. 
 Level III ADR programs must comply with various SEC rules, including the full 
registration and reporting requirements of the SEC's Exchange Act.
Pricing of ADR/GDR 
12 
 Should not be less than higher of the two following 
 Avg weekly (high & low) closing prices in the last six months. 
 Avg weekly (high & low) closing prices in the last two weeks. 
Issue related expenses: should not exceed 
 4%--- in case of GDR 
 7%----in case of ADR 
 2%----Private placement of ADR’s/GDR’s. 
 There are no end-use restrictions on GDR/ADR issue proceeds, except for an 
express ban on investment in real estate and stock markets.
Trading Depositary Receipts 
BUYING 
Source: Depositary receipts information guide; CITIGROUP 
13
India's STERLITE INDUSTRIES LTD 
 Raised $1.75 billion 
 ADSs that were offered: 130,440,000 ADSs 
 Offering price: $13.44 per ADS 
 Underwriters: Merrill Lynch, Fenner & Smith Inc, Morgan Stanley & co. intl plc, and 
Citigroup, Global markets Inc 
 Depositary for the ADS: Citibank, N.A. 
 Total expenses of the offering excluding 
 Underwriting discounts & commissions: $ 9.0 million 
 Registration fees: $ 0.1 million 
 Printing fees: $1.6 million 
 Estimated legal fees: $ 2.5 million 
 Accounting fees: $2.0 million 
 Note: - Underwriters pay for their own legal fees 
14
GLOBAL DEPOSITORY RECEIPTS 
15 
 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.
Types of GDR 
 Rule 144A GDRs 
16 
 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. 
 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.
Difference Between ADR & GDR 
ADR GDR 
American depository receipt (ADR) is 
compulsory for non –us companies to trade 
in stock market of USA. 
17 
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 .
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 TECHNOLOGIES YES YES 
TATA MOTORS YES NO 
PATNI COMPUTERS YES NO 
SBI NO YES 
WIPRO YES YES 
VSNL YES YES 
18
INDIAN DEPOSITORY RECEIPTS 
19 
 These are financial instrument that allows foreign companies to mobilize funds from 
Indian capital market. 
 IDRs are the depository receipts dominated by Indian issued ₹ by the domestic 
depository receipt. 
 Represents interest in the share of non-Indian company’s equity. 
 Like equity shares, these are unsecured instruments & negotiable from one to 
another investors. 
 It provides chance to Indian investors to hold equity shares of foreign company’s.
Who can Invest? 
 Any person who is resident in India as defined under FEMA. 
 NRIs. 
 SEBI registered foreign institutional investor including their sub accounts. 
20
Intermediaries involved in issuance 
of IDR 
 Overseas custodian 
 Domestic depository 
 Merchant banker 
 Registrar and transfer agent 
21
Eligibility Criteria 
As per the companies IDR rules 
Criteria Requirements 
Capital Pre issue paid up capital and free reserve are at least US$ 50 
million. 
Market capitalization Minimum average market capitalization (during the last 3 years) in 
its parent country of at least US$ 100 million. 
Operation history Continuous trading record or history on a stock exchange in its 
parent country at least 3 immediately preceding years. 
Track record of 
distributable profits 
Track record of distributable profits in terms of section 205 of the 
companies act. 1956 for at least 3 out of immediately preceding 5 
years. 
Other requirements Fulfil such other eligibility criteria as may be laid down by SEBI from 
time to time in this behalf. 
22
Allocation of the Issues 
 Minimum 50% of the issue should be allotted qualified institutional buyers (QIB). 
 30% of the issue should be offered to retail individual investors (RIB) including 
employees. 
 Balance 20% to be appointed between Non-institutional investors (NII). 
 Issue Size- Issue shall not be less then ₹50crore. 
 Minimum application amount- Shall be ₹20,000. 
 Extent of issue- The no. of underlying issue shares offered in a financial year through IDR 
offering shall not exceeds 25% of the post issue no. of equity share of the company. 
23
Limits of Investment 
 RII- Minimum of 20,000 of and ₹ maximum of ₹1,00,000. 
 NII- Above ₹1,00,000 and up to the issue size 
 QIB-Above ₹1,00,000 and up to the issue size. 
24
Procedures 
Pre- listing 
Offering process 
Eligibility criteria & public offering 
Listing on stock Exchange 
25
Benefits to the Key Stack Holders 
 Issuing companies. 
 Investors. 
 Employees. 
 Regulators. 
26
THANK YOU 
27

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ADR GDR IDR

  • 1. ADR, GDR & IDR 1
  • 2. DEPOSITORY RECEIPTS 2  Depository receipts are instruments issued by international depositories (ODB), and they represent an interest in the underlying shares held by them in the issuer company (Indian Company). The shares are usually held by a domestic custodian on behalf of the depositories in turn issue the depository receipts, which entitle the holder of the receipts to get the underlying shares on demand.  DRs are traded on Stock Exchanges in the US, Singapore, Luxembourg, London, etc.  DRs listed and traded in US markets are known as American Depository Receipts (ADRs) and those listed and traded elsewhere are known as Global Depository Receipts (GDRs). In Indian context, DRs are treated as FDI.
  • 3. ININTTEERRNNAATTIOIONNAALL C CAAPPITITAALL M MAARRKKEETT ININTTEERRNNAATTIOIONNAALL B BOONNDD M MAARRKKEETT ININTTEERRNNAATTIOIONNAALL E EQQUUITITYY M MAARRKKEETT EURO BOND EURO BOND FOREIGN BOND GGDDRR AADDRR FOREIGN BOND 3
  • 4. AMERICAN DEPOSITORY RECEIPTS 4  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 the complexities involved in buying shares in foreign countries and the difficulties associated with trading at different prices and currency values.
  • 5. Process to Issue ADR/GDR Issuing Company (RIL) Foreign Depository (Morgan Stanley) Clearing Agency (Euro Clear) Domestic Custodian bank (SBI) GDR/ADR Holders (Bank Of America) Foreign Stock Exchange (NYSE) Share Certificate Confirmation Issue of DR Payment Dividend 5
  • 6. Advantages Of ADR/GDR 6  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.  The ODB should request DCB to get the corresponding underlying shares released in favor of non resident of investors. (Shareholders of issuing companies).
  • 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 7
  • 9. Level 1 ADRs: 9  Level 1 ADRs are the lowest level of sponsored ADRs and also the simplest method for companies to access the US capital markets.  Level 1 ADRs are traded in the over-the –counter (OTC) market.  The issuing company does not have to comply with US generally accepted accounting principles (GAAP) or provide US Securities and Exchange Commission (SEC) disclosure.  Level 1 ADRs essentially enable a company to obtain the benefits of a US publicly traded security without altering their current reporting process.  Companies that have level 1 ADRs may upgrade to level II or level III ADR program.  They require minimal SEC registration.
  • 10. Level II ADRs: 10  Level II ADRs enable companies to list their ADRs on Nasdaq, the American Stock Exchange, the New York Stock Exchange and the OTC bulletin board, thereby offering higher visibility in the US market, more active trading and greater liquidity.  Level II ADRs require full registration with the Securities and Exchange Commission. Companies must also meet the requirements of the appropriate stock exchange.  Level II ADRs require a form 20-F and form F-6 to be filled with the SEC, as well as meeting the listing requirements and filing a listing application with the designated stock exchange. Upon F-6 effectiveness and approval of the listing application, the ADRs begin trading.
  • 11. Level III ADRs: 11  level III ADRs enable companies to list their ADRs on Nasdaq, the Amex, the NYSE or the OTC Bulletin Board and make a simultaneous public offering of ADRs in the united states  The benefits of level III ADRs are substantial; it allows the issuer to raise capital and leads to much greater visibility in the U.S market.  Level III ADR programs must comply with various SEC rules, including the full registration and reporting requirements of the SEC's Exchange Act.
  • 12. Pricing of ADR/GDR 12  Should not be less than higher of the two following  Avg weekly (high & low) closing prices in the last six months.  Avg weekly (high & low) closing prices in the last two weeks. Issue related expenses: should not exceed  4%--- in case of GDR  7%----in case of ADR  2%----Private placement of ADR’s/GDR’s.  There are no end-use restrictions on GDR/ADR issue proceeds, except for an express ban on investment in real estate and stock markets.
  • 13. Trading Depositary Receipts BUYING Source: Depositary receipts information guide; CITIGROUP 13
  • 14. India's STERLITE INDUSTRIES LTD  Raised $1.75 billion  ADSs that were offered: 130,440,000 ADSs  Offering price: $13.44 per ADS  Underwriters: Merrill Lynch, Fenner & Smith Inc, Morgan Stanley & co. intl plc, and Citigroup, Global markets Inc  Depositary for the ADS: Citibank, N.A.  Total expenses of the offering excluding  Underwriting discounts & commissions: $ 9.0 million  Registration fees: $ 0.1 million  Printing fees: $1.6 million  Estimated legal fees: $ 2.5 million  Accounting fees: $2.0 million  Note: - Underwriters pay for their own legal fees 14
  • 15. GLOBAL DEPOSITORY RECEIPTS 15  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.
  • 16. Types of GDR  Rule 144A GDRs 16  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.  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.
  • 17. Difference Between ADR & GDR ADR GDR American depository receipt (ADR) is compulsory for non –us companies to trade in stock market of USA. 17 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 .
  • 18. 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 TECHNOLOGIES YES YES TATA MOTORS YES NO PATNI COMPUTERS YES NO SBI NO YES WIPRO YES YES VSNL YES YES 18
  • 19. INDIAN DEPOSITORY RECEIPTS 19  These are financial instrument that allows foreign companies to mobilize funds from Indian capital market.  IDRs are the depository receipts dominated by Indian issued ₹ by the domestic depository receipt.  Represents interest in the share of non-Indian company’s equity.  Like equity shares, these are unsecured instruments & negotiable from one to another investors.  It provides chance to Indian investors to hold equity shares of foreign company’s.
  • 20. Who can Invest?  Any person who is resident in India as defined under FEMA.  NRIs.  SEBI registered foreign institutional investor including their sub accounts. 20
  • 21. Intermediaries involved in issuance of IDR  Overseas custodian  Domestic depository  Merchant banker  Registrar and transfer agent 21
  • 22. Eligibility Criteria As per the companies IDR rules Criteria Requirements Capital Pre issue paid up capital and free reserve are at least US$ 50 million. Market capitalization Minimum average market capitalization (during the last 3 years) in its parent country of at least US$ 100 million. Operation history Continuous trading record or history on a stock exchange in its parent country at least 3 immediately preceding years. Track record of distributable profits Track record of distributable profits in terms of section 205 of the companies act. 1956 for at least 3 out of immediately preceding 5 years. Other requirements Fulfil such other eligibility criteria as may be laid down by SEBI from time to time in this behalf. 22
  • 23. Allocation of the Issues  Minimum 50% of the issue should be allotted qualified institutional buyers (QIB).  30% of the issue should be offered to retail individual investors (RIB) including employees.  Balance 20% to be appointed between Non-institutional investors (NII).  Issue Size- Issue shall not be less then ₹50crore.  Minimum application amount- Shall be ₹20,000.  Extent of issue- The no. of underlying issue shares offered in a financial year through IDR offering shall not exceeds 25% of the post issue no. of equity share of the company. 23
  • 24. Limits of Investment  RII- Minimum of 20,000 of and ₹ maximum of ₹1,00,000.  NII- Above ₹1,00,000 and up to the issue size  QIB-Above ₹1,00,000 and up to the issue size. 24
  • 25. Procedures Pre- listing Offering process Eligibility criteria & public offering Listing on stock Exchange 25
  • 26. Benefits to the Key Stack Holders  Issuing companies.  Investors.  Employees.  Regulators. 26