global depository receipt
DESCRIPTION
Short description about Global depository ReceiptTRANSCRIPT
Global Depository Receipt By
Chandan Senapati Ranjan Kumar Sethi
Need for Depository Receipt?
Depository Receipt
A depository receipt is a transferable financial security which can be traded on stock exchange.
Examples of depository receipts are ADR and GDR.
Process to issue of DR
GDR
If those depository receipts are listed on non-us stock exchange, then they will be called GDR.
It is denominate in US dollars or Euros.
Currently, the stock exchanges trading GDRs:
London Stock Exchange
Luxembourg Stock Exchange
Singapore Stock Exchange
Hong Kong Stock Exchange
How does GDR work?
• Let,1 ITC share in Indian market trades around Rs. 1000. Means 10 Euros.
• HSBC buys 100 shares of ITC and issues in the ratio 10:1 in foreign market .
• Means 1 GDR represents 10 ITC share, i.e. 100 Euros.
• Subsequent price is determined by market forces.
Which Indian Companies have GDR
Bajaj Auto INFOSYS TECHNOLOGIES
Dr Reddy’s SBI
HDFC Bank WIPRO
ICICI bank VSNL
ITC
L&T
MTNL
HINDALCO
GDR listing requirement
• Admission to trading on a Recognized Stock Exchange.
• Transferability of the Underlying Shares & GDRs: The shares underlying the GDRs as well as GDRs itself must be freely transferable, fully paid and free from any restrictions on transfer.
• 25% of the GDRs must be in public hands. This 25% should not include any investor taking more than 5%.
• Market capitalization: The expected aggregate market value of all GDRs to be listed must be at least £700,000.
Advantages provided by GDR
TWO FOLDEDInvestor’s advantageIssuer’s advantage
Investor’s Advantage
Helps investors to invest in foreign companies Advantage of emerging market economies Improves communication with share holders
globally More transparency and stability
Issuer’s Advantage
Attracting foreign investors Exposure in international market Enhances company’s visibility, status and profile Rise in capital