Explain the differences between abbreviations "ADR" and "GDR".
CS Professional · Corporate Funding & Listings in Stock Exchanges · PYQS · June 2023
Explain the differences between abbreviations "ADR" and "GDR".
Answer & Explanation:
Typically, companies in India issue securities in the form of depository receipts (DR) viz. American Depository Receipts (ADR), Global Depository Receipts (GDR) etc. Both ADRs and GDRs are equity based instruments. "American Depository Receipt (ADR)" means a security issued by a bank or a depository in United States of America (USA) against underlying rupee shares of a company incorporated in India. "Global Depository Receipt (GDR)" means a security issued by a bank or a depository outside India (other than the United States of America) against underlying rupee shares of a company incorporated in India (E.g. DRs issued on the Luxembourg Stock Exchange). The difference between American Depository Receipts (ADR) and Global Depository Receipts (GDR) is that ADRs are US $ denominated and traded only in US while GDRs are traded in various places such as London Stock Exchange.
Topics: Global Funding Instruments
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