Depository Receipts (ADR, GDR, IDR) - CA Final SFM (New Syllabus) Classes & Video Lectures

Raising funds by an Indian Company through ADR:

- Deposit of the securities of an Indian company with a custodian bank (agent of the depositary) in India.
- The custodian bank makes acknowledgement of deposits to the depository in the US.
- The depository in the US then issues the ADRs to the investors in the US.
- The US$ receipts in the hands of the depository are passed on to the Indian Company issuing shares.

American Depository Receipt (ADR):

- A certificate (receipt) that represents shares of a foreign company, owned and issued by a U.S. Bank (Depositary).
- Issued in accordance with the provisions stipulated by the Securities and Exchange Commission of USA.
- The foreign shares are held in custody overseas, but the certificates traded on one of the three major U.S. equity markets (the NYSE, AMEX or NASDAQ).
- ADRs are denominated in US$ and funds in the hands of the share issuing company are also in US$.

Features of ADRs (In context of Indian Company)
- ADRs are US$ denominated and are traded in the same way as are the securities of US companies.
- The ADR holder is entitled to the same rights and advantages as owners of the shares in India.
- ADR represents ownership in shares of Indian Company that is traded in US Stock Exchanges.
- ADRs pay dividends in US$ and can be traded like shares of US based companies.
- The value of ADR fluctuates based on the price movements of the underlying shares.

ADR v/s GDR:
- ADR and GDR are commonly used by the Indian companies to raise funds from the foreign capital market.
- The principal difference between ADR and GDR is in the market in which they are issued and the exchange in which they are listed.
- While ADR is traded on US stock exchanges, GDR is traded on European stock exchanges.
- While ADR is issued by a US bank, GDR is issued by the international depository bank, representing foreign company's stock trading globally.
- Through ADR issue, funds can be raised in US stock market, through GDR issue, funds can be raised in any country’s stock market except USA

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[krishnachandranmenon]

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[sarathsnair]

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If simplifying something was an art, you would have been the Picasso of it....💓💓

[act]

Crisp and lucid explanation. I had problems understanding these concepts but now it is crystal clear. Thank you very much Sir.

[vaisakhthorakkad]

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[vaisakhpoomaram]

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[tabassumkhan]

Simplest and best video on youtube for Adr, gdr and IDR. Thank you so much sir 😊

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[mostwantedcodm]

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[angelsharma]

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[benbooker]

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[devapriyab]

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[sanjay]

Thnks Sir its gave a boost in the preparation of exmz at the tha last moments of exmz rush
Thnkss

[yadunarayan]

ADRs, GDRs and IDRs made so simple..hats off !!

[varshagkrishna]

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Thanks from Kerala❤

[rishabhgambhir]

What an explanation Sir!! It's a humble request to you to ease many more complex topics like these!! Thanku for such a good elaboration!

[divyachaudhary]

Can't have more simplest explaination than this!!! Thanks 😀

[TheAuraMaxxer]

Tomorrow is my presentation on topic ADR and seeing this video will help me a lot, well done sir 👍, it's really worth watching your videos 🙃

[aswinmk]

Thank you very much Sir for simplifying the portions to this form...very innovative and impressive lecture... obviously these makes you unique among others..

[yashrane]

Perfect and easy explanation needed for every individual in the feild of finance . Good sir thanks, this helped me alot .

[MithunKarakkat]

I had no idea about Depository Receipts earlier. By watching this 18 minutes video I got a clear picture on it. Thank you Sir for providing such FREE information.