Home | | Commerce 11th std | American Depository Receipts(ADR)

Process of issuing, Features - American Depository Receipts(ADR) | 11th Commerce : International Finance

Chapter: 11th Commerce : International Finance

American Depository Receipts(ADR)

ADR is a dollar denominated negotiable certificate representing a non-US company in US market which allows the US citizens to invest in overseas securities.

American Depository Receipts(ADR)

ADR is a dollar denominated negotiable certificate representing a non-US company in US market which allows the US citizens to invest in overseas securities.

 

Process of issuing ADRs

Steps

1.        First of all, a company hands over the shares to a Domestic Custodian Bank (DCB)

2.        Then DCB requests the American Depository Bank (ADB) to issue the shares in the form of ADRs

3.        ADB converts the issue which are in rupees into US dollars

4.        Finally, ADB issues them to the intending investors.

 

Features of ADR

The features of ADR are briefly given hereunder

1.        ADRs are denominated only in US dollars.

2.        They are issued only to investors who are American residents.

3.        The depository bank should be located in US.

4.        The approval of Securities and Exchange Commission (SEC) of US needs to be obtained for issuing ADR.

5.        They are sub-classified on the basis of level of clearance made by SEC.


 

Tags : Process of issuing, Features , 11th Commerce : International Finance
Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail
11th Commerce : International Finance : American Depository Receipts(ADR) | Process of issuing, Features


Privacy Policy, Terms and Conditions, DMCA Policy and Compliant

Copyright © 2018-2023 BrainKart.com; All Rights Reserved. Developed by Therithal info, Chennai.