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Write Short Notes on Global Depository Receipt : - Secretarial Practice

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Question

Write short notes on Global Depository Receipt : 

Solution

Global Depository Receipt :

Introduction—Globalisation has facilitated Indian Companies to raise international finance by issuing shares to NRIs. But listing of shares in foreign stock exchanges is complicated, rigid and lengthy process. Avoiding such complications, an Indian company can get its shares listed on Foreign Stock Exchanges, using GDRs and ADRs.

Meaning—GDR and ADR are Dollar/Euro denominated instruments traded on foreign stock exchange, containing fixed number of shares. The 'Depository Banks' issue GDRs and ADRs to investors against Indian companies shares. Their holders get same rights like Indian shareholders. If the depository receipt is traded in USA, it is called ADR and if the depository receipt is traded in any country other than USA it is called GDR.

Advantages—They are the means of investment for NRI's and foreign nationals wanting to invest money in India. 

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APPEARS IN

 2017-2018 (March) (with solutions)
Question 3.4 | 5.00 marks
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Write Short Notes on Global Depository Receipt : Concept: Meaning of Global Depository Receipt (GDR).
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