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Difference between GDR and ADR

>> September 24, 2009

  1. Global depository receipt (GDR) is compulsory for foreign company to access in any other country’s share market for dealing in stock. But American depository receipt (ADR) is compulsory for non –us companies to trade in stock market of usa .
  2. ADRs can get from level -1 to level –III. GDRs are already equal to high preference receipt of level –II and level –III.
  3. Indian companies prefer to get GDR due to its global use for getting foreign investment for own business projects.
  4. ADRs up to level –I need to accept only general condition of SEC of USA but GDRs can only be issued under rule 144 A after accepting strict rules of SEC of USA .
  5. GDR is negotiable instrument all over the world but ADR is only negotiable in USA .
  6. Many Indian Companies listed foreign stock market through foreign bank’s GDR. Names of these Indian Companies are following :- (A) Bajaj Auto (B) Hindalco (C) ITC ( D) L&T (E) Ranbaxy Laboratories (F) SBI Some of Indian Companies are listed in USA stock exchange only through ADRs :- (A) Patni Computers (B) Tata Motors
  7. Even both GDR and ADR is the proxy way to sell shares in foreign market by India companies ADRs is not substitute of GDRs but GDRs can use on the place of ADRs .
  8. Investors of UK can buy GDRs from London stock exchange and luxemberg stock exchange and invest in Indian companies without any extra responsibilities . Investors of USA can buy ADRs from New york stock exchange (NYSE) or NASDAQ (National Association of Securities Dealers Automated Quotation).
  9. American investors typically use regular equity trading accounts for buying ADRs but not for GDRs .
  10. The US dollar rate paid to holders of ADRs is calculated by applying the exchange rate used to convert the foreign dividend payment (net of local withholding tax) to US dollars, and adjusting the result according to the ordinary share but GDRs is calculated on numbers of Shares . One GDR's Value may be on two or six shares

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ChaZ November 29, 2014 at 2:09 AM  

Neat comparison done. Some light on the last point (10) would be helpful though.

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