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