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Presentation On GDRs and ADRs


American Depository Receipts (ADR)

ADR = Ownership in the shares of a non US

company Trades in the US financial Market Enables investor to trade in Foreign Companies with ease The price of share will be in US Dollar It is governed by the Regulatory framework in USA Registration of ADR & underlying share with Security Exchange Commission

American Depository Receipts (ADR)

Process of Issue of ADR Directly purchasing from Broker Broker can purchase the existing ADR from the market Create new ADR US broker buying in the issuers home market Deposit share in a bank in that market Bank issue ADR for those shares to brokers account Broker transfer the same to customer account

American Depository Receipts (ADR)

Parties involved First Party Issuing Corporation

Foreign corporation already listed major foreign exchange Instead of double listing the issuer sells bulk amount of its shares to a Recognised Bank in US Buys the shares and sells representative certificate Accepts the share & stores them in a vault Print a bunch of certificate that represent the shares The said certificate issued via exchanges.

Second Party US Bank

American Depository Receipts (ADR)

Parties involved Third Party US Exchange

List the certificate issued the banker for trading Listed in US dollar Not required to deal with the foreign trading rule or law Allow the investor to buy & sell (trade)

Forth Party Securities & Exchange Commission

No pivot role in issuance & trading But ADR issuer has to file certain documents before the proposed ADR

American Depository Receipts (ADR)

Importance: Broaden the shareholder base Enhance Co.s visibility New avenue to raise capital Stronger presence in a foreign market Enhanced communication with the investor in US May increase local price as a result of global demand Allows diversified portfolio to investor

Global Depository Receipts (GDR)

Allows issuer company to raise capital simultaneously in 2 or more market through global offering Marketed internationally Certificate issued by international bank Prices of GDR often close to values of related shares

Global Depository Receipts (GDR)

Shares issued by the company transferred to

depository Which in term issues the receipt Which is quoted & traded at the stock exchanges where it is listed Instrument denominated in dollar or other freely convertible currency Funding vehicle for raising capital in two or more market simultaneously