What is an American Depository Receipt (ADR)?
An American Depository Receipt, or ADR, references the trading shares of a foreign entity on a US stock exchange. They provide easy access to gaining international equities exposure without actually having to exchange currencies and open additional accounts to transact in overseas. They also avoid foreign taxes on each transaction and reduce the admin fees associated to maintaining an overseas account. ADRs will trade like any other stock and are dollar denominated securities, meaning they are traded in dollars and they pay their dividends in dollars as well. American depository receipts are essentially sponsored or issued by US banks. They buy up shares of the foreign stock and repackage them into securities which can be traded on the NYSE, Nasdaq or AMEX. Each depository receipt represents a specified number of shares in the foreign stock; it does not have to be 1 to 1 as many believe. Therefore, if a US bank buys an Indian internet stock for the equivalent of $3 and then turns aroun
In the United States, until 31 August 2005, the Company’s ordinary shares were traded in the form of American Depository Shares, evidenced by ADRs. Each American Depositary Share represented two ordinary shares. On 31 August 2005, the ADR programme was terminated and the ADRs were delisted from NASDAQ.
