What is the difference between GDR and ADR ? Explain.

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Solution

Global Depository Recipts (GDR) are the depository receipts denominated in US dollars issued by depository bank to which the local currency shares of a company are delivered. GDR is a negotiable instrument and can be traded freely like any other security. In the Indian conext a GDR is an instrument issued abroad by an Indian company and is listed and traded on a foreign stock exchange.

American Depository Receipts (ADR) The depository receipts issued by a company in the USA are known as American markets like regular stocks. ADR is similar to a GDR except that it can be issued only to American citizens and can be listed and traded on a stock exchange of USA.

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