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    American Depositary Receipts: Seshadri B Iyer

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    kapilmi2
    This document provides information about American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs). It defines ADRs as negotiable U.S. certificates representing ownership of shares in a non-US corporation that trade on the U.S. market in dollars. GDRs are similarly negotiable instruments denominated in foreign currency that can trade globally. The document outlines the history and types of ADR and GDR programs, how they benefit both companies and investors, examples of Indian companies that have issued GDRs, and compares key differences between ADRs and GDRs such as the markets they trade on and costs associated with each.

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    Attribution Non-Commercial (BY-NC)
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    American Depositary Receipts: Seshadri B Iyer

    Uploaded by

    kapilmi2
    54 views17 pages
    This document provides information about American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs). It defines ADRs as negotiable U.S. certificates representing ownership of shares in a non-US corporation that trade on the U.S. market in dollars. GDRs are similarly negotiable instruments denominated in foreign currency that can trade globally. The document outlines the history and types of ADR and GDR programs, how they benefit both companies and investors, examples of Indian companies that have issued GDRs, and compares key differences between ADRs and GDRs such as the markets they trade on and costs associated with each.

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    27748776-ADR-GDR

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    This document provides information about American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs). It defines ADRs as negotiable U.S. certificates representing ownership of shares in a non-US corporation that trade on the U.S. market in dollars. GDRs are similarly negotiable instruments denominated in foreign currency that can trade globally. The document outlines the history and types of ADR and GDR programs, how they benefit both companies and investors, examples of Indian companies that have issued GDRs, and compares key differences between ADRs and GDRs such as the markets they trade on and costs associated with each.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    54 views17 pages

    American Depositary Receipts: Seshadri B Iyer

    Uploaded by

    kapilmi2
    This document provides information about American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs). It defines ADRs as negotiable U.S. certificates representing ownership of shares in a non-US corporation that trade on the U.S. market in dollars. GDRs are similarly negotiable instruments denominated in foreign currency that can trade globally. The document outlines the history and types of ADR and GDR programs, how they benefit both companies and investors, examples of Indian companies that have issued GDRs, and compares key differences between ADRs and GDRs such as the markets they trade on and costs associated with each.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 17

    AMERICAN

    DEPOSITARY RECEIPTS
    BY :-
    Seshadri B Iyer
    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.

     It can 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  L&T
     Dr. Reddys  MTNL
     HDFC Bank  Ranbaxy Laboratories
     Hindalco  State Bank of India
     ICICI Bank  VSNL
     Infosys Technologies  WIPRO
     ITC
    Benefits Of ADR/GDR For…
    COMPANIES INVESTOR

    •Broadening and diversifying a •Convenient to purchase and hold


    company’s investor base. other countries securities.

    •Enhancing a company's visibility, •Opportunity to earn & invest in


    status and profile in the other other currencies
    countries among investors
    •Diversifying portfolio
    •Offers a new avenue for raising
    equity capital , often at highly •Invest in high growth economies.
    competitive rates.
    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…
    DOMESTIC Releases Equity Shares
    CUSTODIAN BANK
    Has a custody of Indian INDIAN COMPANY
    company equity shares

    Requests the bank Gives Instructions to


    to release of equity Issue ADRs/ GDRs
    Shares
    OVERSEAS
    DEPOSITORY BANK

    Requests for Issue


    buying ADR/GDR ADRs/GDRs

    INVESTORS
    ADR VS GDR…
    Basis of ADR GDR
    comparison

    Centre The NYSE which is the The LSE Is not as large as


    largest stock exchange the NYSE overall, but Is
    In the world is where the the global centre for
    ADR is traded. International equities,
    which dominate In
    Turnover.
    GAAP Foreign companies listing LSE satisfied with a
    in the US must statement of the
    reconcile their accounts to difference between the UK
    US GAAP. and Indian
    Accounting standards
    Basis of ADR GDR
    comparison

    Retail A public offering in the GDR is Issued only to


    US allows an issuer to QIBs but ordinary
    access the US retail investors cannot
    market. This provides participate.
    extra source of demand.

    Liability Legal liability of both a Legal liability of a


    company and its company and its
    individual directors directors is less than in
    increased by a full US the case of an
    listing. ADR.
    Basis of ADR GDR
    comparison

    Cost US listing could be GDR listing on the LSE


    expensive. Total initial is comparatively
    costs likely to be in the Inexpensive. Initial costs
    range of US $10,00,000 likely to be in
    to US $20,00000 the range US $2,00,000
    to US $4,00,000.
    THANK
    YOU!

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