Question

What is an American Depositary Receipt (ADR)?

What are American Depository Receipts (ADRs)?

Answer 1

1. ADR is a dollar-denominated negotiable certificate representing a non-US company in the US market that allows US citizens to invest in overseas securities.
2. The shares are issued by, say, an Indian company to a US intermediary called the depository, in whose name the shares are registered.
3. It is the depository that subsequently issues the ADRs.
4. The physical possession of the equity shares is with another intermediary, the custodian, who is an agent of the depository.
5. An American Depository Receipt (ADR) is an American dollar-denominated instrument representing equity ownership in any non-American company.