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What is GDR/ADR?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 preetham asked almost 3 years ago

Hi Friends I am Preetham. I am studying CA. May I know, What is GDR/ADR?

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7 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

An American Depositary Receipt (“ADR”) is a physical certificate evidencing ownership of American Depositary Shares (“ADSs”). The term is often used to refer to the ADSs themselves. An American Depositary Share (“ADS”) is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company ‘s home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pankaj answered over 2 years ago

An American Depositary Receipt (“ADR”) is a physical certificate evidencing ownership of American Depositary Shares (“ADSs”). The term is often used to refer to the ADSs themselves. An American Depositary Share (“ADS”) is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company ‘s home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered almost 3 years ago

**ADR** -An American Depositary Receipt (ADR) is a certificate that represents shares of a foreign stock owned and issued by a U.S. bank. The foreign shares are usually held in custody overseas, but the certificates trade in the U.S. - It was Introduced to the financial markets in 1927, an American depositary receipt (ADR) is a stock that trades in the United States but represents a specified number of shares in a foreign corporation. -These certificates and the number of ordinary shares of the foreign company they represent can vary widely. For example, one ADR for Anheuser-Busch InBev represents one share in the company, but one ADR for Diageo represents four ordinary shares in the company. Before you make a purchase, be sure to look up your company on one of two ADR-specific websites operated by JPMorgan or BNY Mellon so you know exactly what you are buying. -ADRs can get a little tricky when it comes to taxes on the dividends. Remember that you are essentially investing your money in a foreign country when you buy them, and each country has varying approaches to taxation. In certain situations, the withholding tax may completely eradicate the benefit of the dividend. Therefore it makes sense to look into the withholding tax rates for your particular security. -Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company. **GDR** -A global depository receipt (GDR), also known as international depository receipt (IDR), is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. They are the global equivalent of the original American depository receipts (ADR) on which they are based. -Prices of global depositary receipt are based on the values of related shares, but they are traded and settled independently of the underlying share. Typically, 1 GDR is equal to 10 underlying shares, but any ratio can be used. It is a negotiable instrument which is denominated in some freely convertible currency.[1] GDRs enable a company, the issuer, to access investors in capital markets outside of its home country. **-Characteristics** -it is an unsecured security -it may be converted into number of shares -interest and redemption price is public in foreign agency -it is listed and traded in the stock exchange

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Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

Companies are permitted to raise foreign currency resources through two main sources: a) issue of foreign currency convertible bonds more commonly known as ‘Euro’ issues and b) issue of ordinary shares through depository receipts namely ‘Global Depository Receipts (GDRs)/American Depository Receipts (ADRs)’ to foreign investors i.e. to the institutional investors or individual investors. An American Depositary Receipt (“ADR”) is a physical certificate evidencing ownership of American Depositary Shares (“ADSs”). The term is often used to refer to the ADSs themselves. What is an ADS? An American Depositary Share (“ADS”) is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company ‘s home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company. What is meant by Global Depository Receipts? Global Depository Receipts (GDRs) may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or more markets through a global offering. GDRs may be used in public or private markets inside or outside US. GDR, a negotiable certificate usually represents company’s traded equity/debt. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares... An American depositary receipt (ADR) or global depositary receipt (GDR) is a simple way for investors to invest in companies whose shares are listed abroad. The ADR or GDR is essentially a certificate issued by a bank that gives the owner rights over a foreign share. It can be listed on a stock exchange and bought and sold just like a normal share. The holder of an ADR or GDR is entitled to all benefits such as dividends and rights issues from the underlying shares. They are sometimes – but not always – able to vote. As you might expect from the name, an ADR is listed in the US. A GDR is typically listed in London or Luxembourg. A depositary receipt where the issuing bank is European will sometimes be called a European Depositary Receipt (EDR), although this term is less common. How ADRs work For a real example, let’s look at ICICI Bank. This stock is listed in India and isn’t available to most foreign investors. However it has a depositary receipt issued in New York and traded on the New York stock exchange, which almost anyone can buy. The depositary receipt for ICICI is issued by Deutsche Bank. For each depositary receipt in circulation, Deutsche Bank holds the equivalent number of India-listed shares on behalf of the owners of the ADR. One ADR or GDR does not always equal one share of underlying stock. And with ICICI, the ADR actually represents two India-listed shares of ICICI and is priced accordingly. This is quite common and is done so that the price of the ADR is typical for the market where it trades. Very low-priced shares may have each depositary receipt backed by several shares For very high-priced ones, each depositary receipt represents a fractional claim on the underlying shares. For example, each Nintendo ADR in the US is worth one-eighth of a Nintendo share in Tokyo. The price of the depositary receipt should be equal to the price of the underlying shares, adjusted for currencies. That’s because major institutional investors can arbitrage between the price of the underlying share and the price of the ADR/GDR if the relationship moves too far out of line. However, in some special cases this may not be true – for example, in cases where countries put limits on the maximum amount of a company’s shares that can be owned by foreign investors. If that limit has already been reached, the ADR may trade at a persistent premium to the value of the underlying shares because it’s the only way that foreign buyers can buy into that company. One persistent example of this is HDFC Bank, another Indian bank with an ADR in New York. The depositary bank that issues the ADR can charge a fee for the costs of holding on to the shares that back the ADR and doing all the paperwork. This is typically around US$0.01-0.03 per share per year. Where the company pays dividends, this will usually be deducted from the dividend before that is paid on to the ADR holder. Where the company does not pay a dividend, the depositary bank will usually charge your broker who holds the ADRs on your behalf. The broker will then usually pass those fees onto you.

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Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

A global depository receipt (GDR), also known as international depository receipt (IDR), is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. They are the global equivalent of the original American depository receipts (ADR) on which they are based.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarti Vadnerkar answered almost 3 years ago

Companies are permitted to raise foreign currency resources through two main sources: a) issue of foreign currency convertible bonds more commonly known as ‘Euro’ issues and b) issue of ordinary shares through depository receipts namely ‘Global Depository Receipts (GDRs)/American Depository Receipts (ADRs)’ to foreign investors i.e. to the institutional investors or individual investors. An American Depositary Receipt (“ADR”) is a physical certificate evidencing ownership of American Depositary Shares (“ADSs”). The term is often used to refer to the ADSs themselves. What is an ADS? An American Depositary Share (“ADS”) is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company ‘s home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company. What is meant by Global Depository Receipts? Global Depository Receipts (GDRs) may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or more markets through a global offering. GDRs may be used in public or private markets inside or outside US. GDR, a negotiable certificate usually represents company’s traded equity/debt. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered almost 3 years ago

What is an ADR? --------------- An **American Depositary Receipt (“ADR”)** is a physical certificate evidencing ownership of American Depositary Shares (“ADSs”). The term is often used to refer to the ADSs themselves. An American Depositary Share (“ADS”) is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company ‘s home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company. What is meant by Global Depository Receipts? -------------------------------------------- **Global Depository Receipts (GDRs)** may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or more markets through a global offering. GDRs may be used in public or private markets inside or outside US. GDR, a negotiable certificate usually represents company’s traded equity/debt. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares.

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