SlideShare a Scribd company logo
1 of 27
Download to read offline
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

More Related Content

What's hot

Sources of raising funds in international markets
Sources of raising funds in international marketsSources of raising funds in international markets
Sources of raising funds in international marketsMegha Kushwaha
 
Depository receipts- ADR and GDR covered in this ppt
Depository receipts- ADR and GDR covered in this pptDepository receipts- ADR and GDR covered in this ppt
Depository receipts- ADR and GDR covered in this pptSundar B N
 
Futures and future contracts & trading mechanism of derivatives on stock...
Futures and future contracts & trading mechanism of  derivatives on stock...Futures and future contracts & trading mechanism of  derivatives on stock...
Futures and future contracts & trading mechanism of derivatives on stock...Ameya Ranadive
 
NATIONAL STOCK EXCHANGE
NATIONAL STOCK EXCHANGENATIONAL STOCK EXCHANGE
NATIONAL STOCK EXCHANGE SUJOY KR PAUL
 
case study on GLOBAL DEPOSITORY RECEIPTS
case study on GLOBAL DEPOSITORY RECEIPTScase study on GLOBAL DEPOSITORY RECEIPTS
case study on GLOBAL DEPOSITORY RECEIPTSmdkhankhan8
 
Depository system
Depository systemDepository system
Depository systemsruthiparu
 
PRIMARY MARKET
PRIMARY MARKETPRIMARY MARKET
PRIMARY MARKETAjeesh Mk
 
American depository receipt
American depository receiptAmerican depository receipt
American depository receiptkenzashamsudheen
 
Trading procedure
Trading procedureTrading procedure
Trading procedureKiran Reddy
 
Dematerialisation ppt
Dematerialisation pptDematerialisation ppt
Dematerialisation pptAaryendr
 
Indian stock market
Indian stock marketIndian stock market
Indian stock marketShubham Goel
 
GDR, Working Mechanism and Features
GDR, Working Mechanism and Features GDR, Working Mechanism and Features
GDR, Working Mechanism and Features Kazim Ehsan
 

What's hot (20)

depository receipts
depository receiptsdepository receipts
depository receipts
 
Sources of raising funds in international markets
Sources of raising funds in international marketsSources of raising funds in international markets
Sources of raising funds in international markets
 
Depository receipts- ADR and GDR covered in this ppt
Depository receipts- ADR and GDR covered in this pptDepository receipts- ADR and GDR covered in this ppt
Depository receipts- ADR and GDR covered in this ppt
 
Adr and-gdr
Adr and-gdrAdr and-gdr
Adr and-gdr
 
Futures and future contracts & trading mechanism of derivatives on stock...
Futures and future contracts & trading mechanism of  derivatives on stock...Futures and future contracts & trading mechanism of  derivatives on stock...
Futures and future contracts & trading mechanism of derivatives on stock...
 
Money markets
Money marketsMoney markets
Money markets
 
NATIONAL STOCK EXCHANGE
NATIONAL STOCK EXCHANGENATIONAL STOCK EXCHANGE
NATIONAL STOCK EXCHANGE
 
PRIMARY MARKET PPT
PRIMARY MARKET PPTPRIMARY MARKET PPT
PRIMARY MARKET PPT
 
Otcei
OtceiOtcei
Otcei
 
case study on GLOBAL DEPOSITORY RECEIPTS
case study on GLOBAL DEPOSITORY RECEIPTScase study on GLOBAL DEPOSITORY RECEIPTS
case study on GLOBAL DEPOSITORY RECEIPTS
 
Depository system
Depository systemDepository system
Depository system
 
PRIMARY MARKET
PRIMARY MARKETPRIMARY MARKET
PRIMARY MARKET
 
International Financial Instruments
International Financial InstrumentsInternational Financial Instruments
International Financial Instruments
 
American depository receipt
American depository receiptAmerican depository receipt
American depository receipt
 
Trading procedure
Trading procedureTrading procedure
Trading procedure
 
Debentures ppt
Debentures pptDebentures ppt
Debentures ppt
 
Listing of securities
Listing of securitiesListing of securities
Listing of securities
 
Dematerialisation ppt
Dematerialisation pptDematerialisation ppt
Dematerialisation ppt
 
Indian stock market
Indian stock marketIndian stock market
Indian stock market
 
GDR, Working Mechanism and Features
GDR, Working Mechanism and Features GDR, Working Mechanism and Features
GDR, Working Mechanism and Features
 

Similar to ADR GDR IDR

ADR and GDR : corporate financing
ADR and GDR : corporate financing ADR and GDR : corporate financing
ADR and GDR : corporate financing 92_neil
 
Depository Receipts
Depository ReceiptsDepository Receipts
Depository ReceiptsDeepak Verma
 
External / Overseas sources of funds for MNCs by Anshika Singh
External / Overseas sources of funds for MNCs by Anshika SinghExternal / Overseas sources of funds for MNCs by Anshika Singh
External / Overseas sources of funds for MNCs by Anshika SinghAnshikaSingh141
 
V- International Stock Market
V- International Stock MarketV- International Stock Market
V- International Stock MarketDayanand Huded
 
Overseas sources of finance for Indian corporate
Overseas sources of finance for Indian corporate Overseas sources of finance for Indian corporate
Overseas sources of finance for Indian corporate Sanika Yadav
 
ADR & GDR ::complete Introduction & Information
ADR & GDR ::complete Introduction & Information ADR & GDR ::complete Introduction & Information
ADR & GDR ::complete Introduction & Information Gaurav Kumar
 
Global Depositary Receipt (GDR)
Global Depositary Receipt (GDR)Global Depositary Receipt (GDR)
Global Depositary Receipt (GDR)Mitsui & Co., Ltd.
 
Review of Overseas Sources of Finance for Indian Corporate
Review of Overseas Sources of Finance for Indian CorporateReview of Overseas Sources of Finance for Indian Corporate
Review of Overseas Sources of Finance for Indian CorporateNikitaTiloomalani
 
ADR - American Depository Reciepts - Financial Regulations
ADR - American Depository Reciepts - Financial RegulationsADR - American Depository Reciepts - Financial Regulations
ADR - American Depository Reciepts - Financial RegulationsTanviDeshmukh23
 
International financing options
International financing optionsInternational financing options
International financing optionssharmahitanshu
 
Overseas Fund required by Indian Corporate
Overseas Fund required by Indian Corporate Overseas Fund required by Indian Corporate
Overseas Fund required by Indian Corporate FarazNaqvi12
 
Overseas finance for indian corporate
Overseas finance for indian corporate Overseas finance for indian corporate
Overseas finance for indian corporate akhilsam
 
Raising equity capital through ADR & GDR
Raising equity capital through ADR & GDRRaising equity capital through ADR & GDR
Raising equity capital through ADR & GDRJacky Dhanwani
 
ISSUANCE OF DEPOSITORY RECEIPTS
ISSUANCE OF DEPOSITORY RECEIPTSISSUANCE OF DEPOSITORY RECEIPTS
ISSUANCE OF DEPOSITORY RECEIPTSPavan Kumar Vijay
 
Foreign Private Issuers and ADRs
 Foreign Private Issuers and ADRs Foreign Private Issuers and ADRs
Foreign Private Issuers and ADRsLaura Anthony, Esq.
 
Raising equity in the us market adr issue
Raising equity in the us market   adr issueRaising equity in the us market   adr issue
Raising equity in the us market adr issueVipul Bajaj
 
Raising equity in the us market - ADR issue
Raising equity in the us market - ADR issueRaising equity in the us market - ADR issue
Raising equity in the us market - ADR issueVipul Bajaj
 

Similar to ADR GDR IDR (20)

ADR and GDR : corporate financing
ADR and GDR : corporate financing ADR and GDR : corporate financing
ADR and GDR : corporate financing
 
Depository Receipts
Depository ReceiptsDepository Receipts
Depository Receipts
 
Depository reciepts
Depository recieptsDepository reciepts
Depository reciepts
 
External / Overseas sources of funds for MNCs by Anshika Singh
External / Overseas sources of funds for MNCs by Anshika SinghExternal / Overseas sources of funds for MNCs by Anshika Singh
External / Overseas sources of funds for MNCs by Anshika Singh
 
V- International Stock Market
V- International Stock MarketV- International Stock Market
V- International Stock Market
 
Overseas sources of finance for Indian corporate
Overseas sources of finance for Indian corporate Overseas sources of finance for Indian corporate
Overseas sources of finance for Indian corporate
 
ADR & GDR ::complete Introduction & Information
ADR & GDR ::complete Introduction & Information ADR & GDR ::complete Introduction & Information
ADR & GDR ::complete Introduction & Information
 
Global Depositary Receipt (GDR)
Global Depositary Receipt (GDR)Global Depositary Receipt (GDR)
Global Depositary Receipt (GDR)
 
Review of Overseas Sources of Finance for Indian Corporate
Review of Overseas Sources of Finance for Indian CorporateReview of Overseas Sources of Finance for Indian Corporate
Review of Overseas Sources of Finance for Indian Corporate
 
ADR - American Depository Reciepts - Financial Regulations
ADR - American Depository Reciepts - Financial RegulationsADR - American Depository Reciepts - Financial Regulations
ADR - American Depository Reciepts - Financial Regulations
 
International financing options
International financing optionsInternational financing options
International financing options
 
Overseas Fund required by Indian Corporate
Overseas Fund required by Indian Corporate Overseas Fund required by Indian Corporate
Overseas Fund required by Indian Corporate
 
Ppt overseas sources of finance
Ppt overseas sources of financePpt overseas sources of finance
Ppt overseas sources of finance
 
Overseas finance for indian corporate
Overseas finance for indian corporate Overseas finance for indian corporate
Overseas finance for indian corporate
 
Raising equity capital through ADR & GDR
Raising equity capital through ADR & GDRRaising equity capital through ADR & GDR
Raising equity capital through ADR & GDR
 
ISSUANCE OF DEPOSITORY RECEIPTS
ISSUANCE OF DEPOSITORY RECEIPTSISSUANCE OF DEPOSITORY RECEIPTS
ISSUANCE OF DEPOSITORY RECEIPTS
 
Ifm tp
Ifm tpIfm tp
Ifm tp
 
Foreign Private Issuers and ADRs
 Foreign Private Issuers and ADRs Foreign Private Issuers and ADRs
Foreign Private Issuers and ADRs
 
Raising equity in the us market adr issue
Raising equity in the us market   adr issueRaising equity in the us market   adr issue
Raising equity in the us market adr issue
 
Raising equity in the us market - ADR issue
Raising equity in the us market - ADR issueRaising equity in the us market - ADR issue
Raising equity in the us market - ADR issue
 

More from Vinay Golchha

Investment Decision Criteria
Investment Decision CriteriaInvestment Decision Criteria
Investment Decision CriteriaVinay Golchha
 
Concepts & Role Of Mutual Funds
Concepts & Role Of Mutual FundsConcepts & Role Of Mutual Funds
Concepts & Role Of Mutual FundsVinay Golchha
 
Introduction To Shares
Introduction To SharesIntroduction To Shares
Introduction To SharesVinay Golchha
 
Companies law part 2
Companies law part 2Companies law part 2
Companies law part 2Vinay Golchha
 
Introduction to Company Act
Introduction to Company ActIntroduction to Company Act
Introduction to Company ActVinay Golchha
 
Sales Of Goods Act 1930
Sales Of Goods Act 1930Sales Of Goods Act 1930
Sales Of Goods Act 1930Vinay Golchha
 

More from Vinay Golchha (9)

Investment Decision Criteria
Investment Decision CriteriaInvestment Decision Criteria
Investment Decision Criteria
 
Concepts & Role Of Mutual Funds
Concepts & Role Of Mutual FundsConcepts & Role Of Mutual Funds
Concepts & Role Of Mutual Funds
 
Introduction To Shares
Introduction To SharesIntroduction To Shares
Introduction To Shares
 
Companies law part 2
Companies law part 2Companies law part 2
Companies law part 2
 
Introduction to Company Act
Introduction to Company ActIntroduction to Company Act
Introduction to Company Act
 
Sales Of Goods Act 1930
Sales Of Goods Act 1930Sales Of Goods Act 1930
Sales Of Goods Act 1930
 
Cost of capital
Cost of capitalCost of capital
Cost of capital
 
Evernote
EvernoteEvernote
Evernote
 
Rfid..
Rfid..Rfid..
Rfid..
 

Recently uploaded

20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdfAdnet Communications
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneurabcisahunter
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...Antonis Zairis
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptxFinTech Belgium
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.KumarJayaraman3
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023SkillCircle
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxsonamyadav7097
 
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxSlideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxOffice for National Statistics
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfMichael Silva
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI360factors
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 

Recently uploaded (20)

20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptx
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptx
 
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxSlideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdf
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 

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