ADR:
MEANING:
An American Depository Receipt (ADR) is a stock which trades in the United States (US) but represents a specified number of shares in a non-US corporation (like Infosys, etc). ADRs are bought and sold on American stock markets[pic]
just like regular stocks, and are issued/sponsored in the U.S. by a DEPOSITARY bank[pic]
- The first ADR was introduced by JPMorgan in 1927, for the British retailer Selfridges&Co
- ADRs were introduced because of the difficulty in buying shares from other non-US countries which trade at different prices and currency values.
- U.S. banks simply purchase a large lot of shares from a foreign company, bundle the shares into groups and reissue them on either the NYSE, AMEX, or Nasdaq.
- The depository bank sets the ratio of U.S. ADRs per home country share. This ratio can be anything less than or greater than 1. For example, a ratio of 4:1 means that 1 each ADR share represents 4 shares in the foreign company.
OBJECTIVE:
is to save individual investors money by reducing administration costs and avoiding duty on each transaction.
For individuals, ADRs are an excellent way to buy shares in a non-US company and capitalize on growth potential outside North America. ADRs offer a good opportunity for capital appreciation as well as income[pic]
if the company pays dividends.
Types:
• Unsponsored Shares
• Sponsored Shares
Eg: DR. REDDY'S LABORATORIES LTD. , ICICI BANK LTD.
GDR
MEANING:
Global Depository Receipt (GDR) - certificate issued by international bank, which can be subject of worldwide circulation on capital markets.
-GDR's are emitted by banks, which purchase shares of foreign companies and deposit it on the accounts.GDRs represent ownership of an underlying number of shares.
- Global Depository Receipts facilitate trade of shares, and are commonly used to invest in companies from developing or emerging markets....