AMERICAN

DEPOSITARY
RECEIPTS
ADR- IN A
NUTSHELL…
Domestic Stock
Exchange U.S.
AMERICA

CERTIFICATE
SHARES

 An ADR is a negotiable U.S. certificate representing

ownership of shares in an non-US corporation. ADR’s are
quoted and traded in U.S. Dollars in the US securities market.
Also, the dividends are paid to investor in US dollars.

 ADRs were specifically designed to facilitate the purchase,

holding and sale of non-US securities by US investor, and to
provide a corporate finance vehicle for non-US companies.
ABOUT ADR…
 ADRs first introduced in 1927
 The stock of many non US companies,
traded on US exchanges through the use
of ADRs.
 ADRs enable US investors to buy shares
in foreign companies without undertaking
cross-border transactions.
 The shares of the non-US corporation
trade on a non-US exchange, while the
ADRs trade on a US exchange.
Types of ADR…
 Unsponsored ADR Program
 Sponsored ADR Program
§ Level I
§ Level II
§ Level III
Specimen Of ADR …
GLOBAL DEPOSITARY
RECEIPTS
GDR-IN A
NUTSHELL…
 negotiable instrument denominated in
freely convertible currency.

 Global funding vehicle for raising capital.

 Itcan be traded globally in exchange or

otc market.
About GDR…

 In may 1992 by reliance industries US $ 150 mn.

 After that market pulled down due to several

reasons.

 Political instability, falling markets, liquidity crunch

etc.

 Biggest Asian GDR issued by SBI in 1997 for US $

350 mn.
Indian Companies
Issuing GDR…
 Bajaj Auto
 Dr. Reddys
 HDFC Bank
 Hindalco
 ICICI Bank
 Infosys Technologies
 ITC
Benefits Of ADR/GDR
For…
NRI cant invest directly…
• If you are a foreign born individual investor
whose parents or grand parents were never
part of India, Indian Capital Markets are closed
for you for direct investment.
• Indian rupee is still controlled by Indian
government for Capital account transactions.
• This means, resident Indian nationals are not
allowed to invest in overseas stocks and
likewise, foreign nationals can not invest in
Indian markets.
Process for ADR/GDR…
Releases Equity
Shares

Requests the Gives Instructions

bank to release to Issue ADRs/
of equity Shares GDRs

Requests for Issue

buying ADRs/GDRs
ADR/GDR
ADR VS GDR…
THANK
YOU!