Depository Receipts like ADR, GDR

ADRs –American Depository Receipts

American Depository Receipts are Receipts or Certificates issued by US

Bank representing specified number of shares of non-US Companies. Defined as under:

These are issued in capital market of USA alone. These represent securities of companies of other countries.

These securities are traded in US market. The US Bank is depository in this case. ADR is the evidence of ownership of the underlying shares. Unsponsored ADRs

It is the arrangement initiated by US brokers. US Depository banks create

such ADRs. The depository has to Register ADRs with SEC (Security

Exchange Commission). Sponsored ADRs

Issuing Company initiates the process. It promotes the company‟s ADRs in

the USA. It chooses single Depository bank. Registration with SEC is not

compulsory. However, unregistered ADRs are not listed in US exchanges. GDRs – Global Depository Receipts

Global Depository Receipt is a Dollar denominated instrument with

following features:

1. Traded in Stock exchanges of Europe. 2. Represents shares of other countries. 3. Depository bank in Europe acquires these shares and issues

“Receipts” to investors. 4. GDRs do-not carry voting rights. 5. Dividend is paid in local currency and there is no exchange risk for

the issuing company. 6. Issuing Co. collects proceeds in foreign currency which can be used

locally for meeting Foreign exchange requirements of Import. 7. GDRS are normally listed on “Luxembourg Exchange “ and traded

in OTC market London and private placement in USA. 8. It can be converted in underlying shares.

IDRs – Indian Deposits Receipts

Indian Depository Receipts are traded in local exchanges and represent

security of Overseas Companies. CDF (Currency Declaration Form)

CDF is required to be submitted by the person on his arrival to India at the

Airport to the custom Authorities in the following cases:

1. If aggregate of Foreign Exchange including foreign currency/TCs

exceeds USD 10000 or its equivalent. 2. If aggregate value of currency notes (cash portion) exceeds USD

5000 or its equivalent. Form A1 and

Form A2

Form A1 is meant for remittance abroad to settle imports obligations. It is

not required if value of imports is up to USD 5000. Form A2 is meant for remittance abroad on account of any purpose other

than Imports. It is not required if remittance is up to USD 25000. LIBOR Rate London Interbank Offering rate is the rate fixed at 11 am (London time) at

which top 16 banks in London offer to lend funds in interbank markets.