American depository receipt and Global depository receipt.

1. Lokesh Dodani – 32
Sunil Gyanchandani – 42
Tripti Kochar – 52
Mukul Ahuja – 05
Akshay Aggarwal – 03
Manish Mahajan – 59
Ritika Gupta – 41

2. Depository Receipt
ADR - American Depositary Receipt
 AnADR represents ownership in the shares of a
non-U.S. company and trades in U.S. financial
markets.
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3. GDR - Global Depositary Receipt
 GDRis a certificate issued by a depository bank,
which purchases shares of foreign companies.
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4. ISSUER INVESTOR
Attractive pricing Diversification
No foreign exchange Negotiable instrument free
fluctuations from investment restrictions
Granting ESOPs Investment opportunities &
Less obstacles
Less monitoring Trading information and
research
Enhances image of company Prompt dividend payment
globally. in dollars

5. ADR GDR
 Centre – NYSE  Centre – LSE
 Disclosure – Requires  Disclosure – Only Detailed
Comprehensive Disclosure. Information Required.
 GAAP – Company accounts  GAAP – Satisfied with
must be reconciled to US Statement of difference
GAAP. between the A/c Standards.
 Cost – Comparatively  Cost – Comparatively lower.
higher.  Retail – Only QIBs allowed
 Retail – US retail market in US.
can be accessed.  Liability – Comparatively
 Liability – Legal liability is less than ADR.
more.
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6. Lead manager Listing agent
Co-manager Legal advisors
Overseas Printers
Depository Banks Auditors
Domestic Underwriters
Custodian Bank

8. 5
Company issues Ordinary Shares
Kept with Domestic Custodian
Transferred to the Overseas Depository
Bank
ADR’s /GDR’s are issued by ODB
Receipts given to the foreign investors

9. Appoint Listing Agent / Lead manger
Due Diligence Positioning
Required financial Valuation
statements Deal Structure
Prepare prospectus Presentation material
and Q & A practice
Apply for listing &
regulatory approval Analyst Meeting
through listing agent
Premarketing to
Institutions
Road shows & marketing to investors
List on Eurolist , Start trading

10. Types of ADRs
Unsponsored Sponsored
Level I Level II Level III Private placement

11.  Created in response of investors, brokers - dealers and
depository.
 Exempted from reporting requirements of the SEC.
 Not Listed on any exchange.
Advantages: Disadvantages:
 Inexpensive.  No control over the
 Expands investors base. activity.
 Minimal SEC compliance and  Conversion
reporting requirements. becomes costly.

12.  Initiated by Issuer.
 Established jointly by an Issuer and Depository.
 Agreement between Issuer and Depository.
 Depository provides shareholders communication and
other information to ADR holders.
 Through Depository ADR holders can exercise voting
rights.

13. Level I Level II Level III
Most
Least Expensive More Expensive
Expensive
Minimal SEC Full SEC SEC reporting
registration registration & is more
&reporting reporting detailed than
requirements. requirements. Level II.
Listed on
Cannot be listed on
Listed on National National
National exchange of
exchange of US. exchange of
US.
US.
Capital can be
Capital Raising is not Capital Raising is raised through
permitted. not permitted. Public
offering.

14.  Capital can be raised by placing Depositary
Receipts with large institutional investors.
 Do not have to conform full SEC reporting and
registration requirements.
 Cheaper means of raising equity capital.
 Can only be sold to QIBs.

15. Fungibility = Interchangeability of any security
One way Two way

16.  Improvement in Liquidity
 Elimination of Arbitrage.

17.  Dividend will be taxed @10 %
 All transactions of trading of the GDRs outside
India, among non-resident investors, will be free
from any liability of income tax in India.
 Capital gains arising on the redemption of shares
will be liable to income tax Section 115AC.
 Long-term capital gains tax @ 10 %
 Short-term capital gains tax@ 15 %
(Section 195 and 196 of IT Act).
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18. Eligibility of the issuer Eligibility of the
subscriber
Approval of Board of Approval of shareholders
Directors
Listing requirements Approval of FIPB
Pricing Reporting requirements
of RBI
Issue expenses Companies Act

19. Private Sector Banking 74% Drugs & Pharmaceuticals 100%
Non-Banking Financial 100% Road and highways, Ports and 100%
Companies harbours
Insurance 26% Hotel & Tourism 100%
Telecommunications 74% Mining 74-
Services 100%
Petroleum Refining- 100% Advertising 100%
Private Sector
Housing and Real Estate 100% Films 100%
Trading 51-100% Airports 74%
Coal & Lignite 50-100% Mass Rapid Transport 100%
Systems
Power 100% Pollution Control & Mng. 100%
Air transport Services 100% -NRIs, Special Economic Zones 100%
(no foreign airlines) 49% others

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