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AMERICAN DEPOSITARY

RECEIPTS
What is ADR?

An ADR is a negotiable U.S. certificate representing ownership of shares in an


non-U.S. corporation. ADRs are quoted and traded in U.S. dollars in the U.S.
securities market. Also, the dividends are paid to investor in U.S. dollars.

ADRs were specifically designed to facilitate the purchase, holding and sale of
non-U.S. securities by U.S. investor, and to provide a corporate finance vehicle
for non-U.S. companies.
Some more points about ADRs...


ADRs were first introduced in 1927.

The stock of many non-US companies, trade 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.
ADR Ratio
ADR Issue
Benefits of ADRs

BENEFITS TO BENEFITS TO
COMPANIES INVESTORS

Broadening and diversifying a Convenient to purchase and hold


company’s US investor base a
non-U.S. issuer's securities.
Enhancing a company’s
visibility, Opportunity to invest and earn in
status and profile in the US and US dollars.
internationally, among investors.
Diversifying portfolio.
Offers a new avenue for raising
equity capital, often at highly Invest in high-growth economies.
competitive rates.
Working of ADR Market
Participants in ADR Market
ISSUER DEPOSITARY BROKERS
Appoint depositary,
lawyers, investment bank,
etc.
Prepare & issue
Make securities available
Determine program type. certificates.
to investors.
Obtain approval from Announcement of issue.
Submit required forms.
Board of Directors,
shareholders and Coordinate with lawyers,
Execute & settle trades.
regulators. accountants & bankers.

CUSTODIAN INVESTMENT
BANKERS

Receive underlying shares.

Confirm deposit of under- Advise on DR structure.


lying shares.
Conduct roadshow.
Transmit dividend
payments. Price & launch securities.