25 May 2009
A GDR means any instrument in the form of a Depository receipt created by the Overseas Depository Bank (ODB) outside India and issued to non-resident/foreigners against the shares of Indian companies.They are denominated in dollars.
ADR is similar to GDR except the fact that it is more stringent to issue ADR since US-GAAP has to be complied with.
They are traded on overseas stock exchange.While ADRs are listed on the US stock exchanges, the GDRs are usually listed on a European stock exchange.
27 May 2009
ADR stands for American Depository Receipts and GDR stands for Global Depository Receipts.
Indian companies which are listed on recognized stock exchanges of India can get listed also on stock exchanges in other countries either directly by complying with the policy existing in the particular country or indirectly which is by way of ADR & GDR.
These companies can indirectly participate and get listed on the foreign bourses by depositing a large number of shares with the bank located in the country which in turn issues receipts against these shares and acts as a depository of such shares and each receipt shall have a fixed number of shares underlying it. These receipts are then sold to people of the foreign country who are eligible to buy them. The receipts as defined above are depository receipts.
Each receipt as above amounts to shares held in the company.
Both ADR and GDR are these depository receipts and give a right to holder of such receipts to claim the underlying shares. The depository receipts traded in U.S.A. are called American Depository Receipts and the depository receipts traded in a country other than USA are called Global Depository Receipts.
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