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WHAT DOES ADR MEAN?

S.RAM (FINAL STUDENT) (126 Points)

27 August 2009

FRIENDS,

WHAT IS THE MEANING OF AMERICAN DEPOSITORY RECEIPTS (ADR)?

I READ THE ARTICLE REGARDING ICICI BANK TO TREAT IT AS AN INDIAN BANK IN THIS THIS ADR IS REFFERRED.

PLZ CLARIFY.

THANK YOU.

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3 Replies

Ashish M (Chartered Accountant) (2731 Points)
Replied 27 August 2009

Dear Ram.......U CAN SIMPLY UNDERSTAND IT THIS WAY..........

When any person outside india wants to invest in teh shares in india, one of the ways to invest is ADR's or GDR's.......

Any indian company usually if wants to make a public issue, it issues shares to Indian public......But if it wants to raise capital from outside india i.e. from some foreign country, it can't issue shares their,.....it can do so only by way of Depository reciepts (DR)........

So u can say these are just like shares which are issued to raise capital outside india.........So any such DR's issued in America is known as ADR's (American depository reciepts)........and if issued in some other countries, known as GDR's (Global Depolitory reciepts)........Now since these aer issued with the help of banking channel, it came to ur notice while reading banking related article...............

thanx

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BHAGYESH RAVANGE (C.A Job) (1528 Points)
Replied 27 August 2009

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 just like regular stocks, and are issued/sponsored in the U.S. by a bank or brokerage.