06 August 2010
ADR: American Depository Receipts GDR: Global Depository Receipts IDR: Indian Depository Receipts
In simple word we can say these are instruments through which fund can be raised abroad. What happens in these ADRs and GDRs is that an Indian corporate can deposit its stock (shares) with a foreign depository (foreign host country equivalents to our own NSDL and CSDL) and raise money from foreign public by offering these ADR/GDR issues for subscription. Usually the corporate conducts a road-show (advertising and publicity for its issue) and attracts the attention/interest of the foreign public to subscribe to its capital. The foreign governments and / or stock exchanges (where the issue will be listed) will have their own regulations (which are usually very stringent) which have to be complied with by the Indian corporate. The government liberalized the rules in this regard sometime in 2002.
And IDR is an exact reverse of the ADR/GDR issue. A foreign company can raise capital from Indian public, the same way that Indian companies can raise capital through ADR/GDR issues. The government of India framed the IDR rules sometime in 2004.
06 August 2010
What Does Global Depositary Receipt - GDR A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through the various bank branches.
2. A financial instrument used by private markets to raise capital denominated in either U.S. dollars or euros. A Global Depository Receipt or Global Depositary Receipt (GDR) is a certificate issued by a depository bank , which purchases shares of foreign companies and deposits it on the account . 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 . Prices of GDRs are often close to values of related shares, but they are traded & settled independently of the underlying share. Several international banks issue GDRs, such as JPMorgan Chase , Citigroup , Deutsche Bank , Bank of New York . They trade on the International Order Book (IOB) of the London Stock Exchange . Normally 1 GDR = 10 Shares
What Does International Depository Receipt - IDR Mean?
A negotiable, bank-issued certificate representing ownership of stock securities by an investor outside the country of origin. the equivalent of an American depository receipt in the rest of the world, an IDR is a negotiable certificate issued by a bank that indicates ownership of stock A receipt issued by a bank as evidence of ownership of one or more shares of the underlying stock of a foreign corporation that the bank holds in trust. The advantage of the IDR structure is that the corporation does not have to comply with all the issuing requirements of the foreign country where the stock is to be traded. The US version of the IDR is the American Depository Receipt (ADR).
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