{"id":610,"date":"2019-10-03T13:37:07","date_gmt":"2019-10-03T13:37:07","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=610"},"modified":"2021-03-15T12:19:05","modified_gmt":"2021-03-15T06:49:05","slug":"global-depository-receipt","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/","title":{"rendered":"What is GDR (Global Depository Receipt): An Overview"},"content":{"rendered":"\n<p class=\"has-drop-cap\">For\nfacilitating long term debt instruments and for generating capital, Investors\nuse capital markets that involve ADR, GDR, and IDR. The issuance of these\nreceipts is the most efficient and widely known method of raising capital from\nforeign capital markets. Also, it provides an opportunity for foreign investors\nto invest in domestic companies. Here, in this article, we will go through the\nbrief details of ADR (American Depository Receipts) and IDR (Indian Depository\nReceipts) while we will have a detailed overview of the (GDR) Global Depository\nReceipt.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#What_is_Depository_Receipt\" >What is Depository Receipt?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Recent_Amendment\" >Recent\nAmendment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#What_are_ADR_American_Depository_Receipt_and_IDR_Indian_Depository_Receipt\" >What are ADR (American Depository Receipt) and IDR (Indian Depository Receipt)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Global_Depository_Receipt_GDR\" >Global Depository Receipt (GDR)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Characteristics_of_GDR_Global_Depository_Receipt\" >Characteristics of GDR (Global Depository Receipt)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Advantages_of_GDR_to_Issuing_Company\" >Advantages of GDR to Issuing Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Advantages_of_GDR_to_Investor\" >Advantages of GDR to Investor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Disadvantages_of_Global_Depository_Receipts\" >Disadvantages of Global Depository Receipts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Procedure_for_the_Issuance_of_GDR_in_a_Company\" >Procedure for the Issuance of GDR in a Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/global-depository-receipt\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Depository_Receipt\"><\/span>What is Depository Receipt?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When any foreign company or any foreign individual with the help of Domestic Bank or Depository invests in the Domestic Companies listed in the local stock exchange of that particular country\u2019s currency, the receipt offered to that individual is known as Depository Receipt.<\/p>\n\n\n\n<p><strong><em>Let us understand this with a simple example<\/em><\/strong><\/p>\n\n\n\n<p>Any foreign individual with the help of a Depository <strong>(SBI Bank<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/State_Bank_of_India\"><strong>[1]<\/strong><\/a><\/sup><strong>)<\/strong>&nbsp;invests in the Domestic Company say Reliance Industries listed in the Domestic stock Exchange of our country (BSE\/ NSE) in our country\u2019s currency that is Rupees, and then the receipt issued is called Depository Receipt.<\/p>\n\n\n\n<p>The receipt is issued by the Domestic Stock Exchange, such as BSE (Bombay Stock Exchange) or NSE (National Stock Exchange).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recent_Amendment\"><\/span>Recent\nAmendment <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The Ministry of Corporate Affairs (MCA) in Gazette of India by notification dated 13th February 2020 notified that the Companies (Issue of Global Depository Receipts) Rules, 2020 new proviso in rule 7 has been introduced that states that the issue of depositories receipt proceeds may be remitted back in an IFSC bank unit and the same      shall be utilized according to the instructions issued by the EBI timely.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_ADR_American_Depository_Receipt_and_IDR_Indian_Depository_Receipt\"><\/span>What are ADR (American Depository Receipt) and IDR (Indian Depository Receipt)?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>American Depository Receipt<\/strong><\/p>\n\n\n\n<p> ADR (American Depository Receipt) is a negotiable financial instrument which is issued by a US bank representing securities of a foreign company listed on the US stock market. The domestic investors invest in the companies outside their country where the dividend is paid to the ADR holders in US Dollars. <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"637\" height=\"335\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-8.png\" alt=\"American Depository Receipt\" class=\"wp-image-27472\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-8.png 637w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-8-300x158.png 300w\" sizes=\"(max-width: 637px) 100vw, 637px\" \/><\/figure><\/div>\n\n\n\n<p><strong>IDR (Indian Depository Receipt)<\/strong><\/p>\n\n\n\n<p> &nbsp;IDR (<a href=\"https:\/\/corpbiz.io\/learning\/a-complete-checklist-of-indian-depository-receipts\/\"><strong>Indian Depository Receipt<\/strong><\/a>) is a negotiable financial instrument which is issued by the Indian bank representing the securities of a foreign company listed in the Indian stock market. The US investors invest in the companies outside their country that are in India, where the dividend is paid to the IDR holders in Indian Rupees (INR). <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"567\" height=\"298\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-9.png\" alt=\"IDR (Indian Depository Receipt)\" class=\"wp-image-27473\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-9.png 567w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-9-300x158.png 300w\" sizes=\"(max-width: 567px) 100vw, 567px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Global_Depository_Receipt_GDR\"><\/span>Global Depository Receipt (GDR)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>GDR (Global Depository Receipt) is a negotiable financial instrument that is issued by a foreign bank other than the US representing securities of a foreign company listed in any country\u2019s stock market other than the US. The domestic investors invest in the companies outside their country where the dividend is paid to the GDR holders in Euro or GBP.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"641\" height=\"337\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-10.png\" alt=\"Global Depository Receipt (GDR)\" class=\"wp-image-27474\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-10.png 641w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-10-300x158.png 300w\" sizes=\"(max-width: 641px) 100vw, 641px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Characteristics_of_GDR_Global_Depository_Receipt\"><\/span>Characteristics of GDR (Global Depository Receipt)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Exchange-Traded<\/strong><\/li><\/ul>\n\n\n\n<p>GDR is\nexchange-traded instruments where the intermediary buys a bulk quantity of a\nforeign company and creates the GDRs which are traded on the local stock\nexchange. These GDRs are then traded on the multiple stock exchanges of\nmultiple countries other than the US.<\/p>\n\n\n\n<ul><li><strong>Conversion\nRatio<\/strong><\/li><\/ul>\n\n\n\n<p>Conversion\nration means the number of shares a GDR can hold. Usually, it varies from a\nfraction to a very high number. Although 1 GDR certificate holds ten shares,\nthe range is flexible.<\/p>\n\n\n\n<ul><li><strong>Unsecured<\/strong><\/li><\/ul>\n\n\n\n<p>GDR is\nunsecured securities and is not backed by any asset other than the value of the\nshares that are held in that certificate.<\/p>\n\n\n\n<ul><li><strong>Price\nBased on Underlying<\/strong><\/li><\/ul>\n\n\n\n<p>The price\nof a GDR is based on the price of the share that it holds, the supply and\ndemand of a particular GDR.<\/p>\n\n\n\n<ul><li><strong>GDR\nis denominated in any foreign currency<\/strong><\/li><\/ul>\n\n\n\n<p>The fundamental shares shall be denominated in the\nlocal currency of the issuer but GDR is always denominated in foreign currency.<\/p>\n\n\n\n<ul><li><strong>The\nholder is entitled to dividend and bonus <\/strong><\/li><\/ul>\n\n\n\n<p>On the basis of value of shares under the GDR the holder of the same is entitled to bonus and dividend.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_GDR_to_Issuing_Company\"><\/span>Advantages of GDR to Issuing Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>There is accessibility to foreign capital markets.<\/li><li>There is an increase in the visibility of the issuing company.<\/li><li>Rise in the capital of the issuing company because of foreign investors.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_GDR_to_Investor\"><\/span>Advantages of GDR to Investor<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>It provides more transparency since competitors\u2019 securities can be compared.<\/li><li>There is the capital gain payment.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disadvantages_of_Global_Depository_Receipts\"><\/span>Disadvantages of Global Depository Receipts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Violation of any regulation can lead to serious consequences against the company.<\/li><li>In GDR, the dividends are paid in the Domestic country\u2019s agency, which is subject to volatility in the forex market.<\/li><li>GDR is an expensive source of financing for any company.<\/li><li>It is beneficial to the investors who have the capacity to invest a high      amount in GDR.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_the_Issuance_of_GDR_in_a_Company\"><\/span>Procedure for the Issuance of GDR in a Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Approvals<\/strong><\/li><\/ul>\n\n\n\n<p>For the\nissuance of GDR, you first need the approval of the Board of Directors,\nShareholders, Regulatory Authorities, and Financial Institutions.<\/p>\n\n\n\n<ul><li><strong>Appointment of Intermediaries<\/strong><\/li><\/ul>\n\n\n\n<p>After the\napproval, intermediaries like Lead Manager, Co-Manager, Overseas Depository\nBanks, Legal Advisors, Auditors, and Underwriters are appointed as\nIntermediaries during the creation of GDR of the company.<\/p>\n\n\n\n<ul><li><strong>Documentation<\/strong><\/li><\/ul>\n\n\n\n<p>Principal\nDocuments like Subscription agreement, Depository agreement, and Trust deed are\nmade.<\/p>\n\n\n\n<ul><li><strong>Pre and Post Launch<\/strong><\/li><\/ul>\n\n\n\n<p>In the\nend, additional key actions like timing, pricing the issue, the closing of the\nissue are done.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Through Depository Receipt, any foreign individual or company can enter and tap multiple markets to raise funds and establish the trading presence in the foreign markets. Every country across the world wants to expand its business and mark its footprint in the International Market. Global Depository Receipt is one such receipt through which any company can issue shares in another country stock exchange except the US. It provides companies in emerging markets with opportunities that will help in rapid growth and development.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/manage-accounts-receivable-process-effectively\/\">10 Simplistic Ways to Manage Accounts Receivable Process Effectively\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For facilitating long term debt instruments and for generating capital, Investors use capital markets that involve ADR, GDR, and IDR. The issuance of these receipts is the most efficient and widely known method of raising capital from foreign capital markets. Also, it provides an opportunity for foreign investors to invest in domestic companies. Here, in [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":615,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[128],"tags":[124],"acf":{"service_id":"321"},"authorName":"Shalini Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/09\/MEE.jpeg","authorDescription":"Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.","postViews":59301,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/610"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=610"}],"version-history":[{"count":25,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/610\/revisions"}],"predecessor-version":[{"id":27479,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/610\/revisions\/27479"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/615"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}