36836385-Adr-Gdr-Final

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ADR-American Depository Receipt.GDR-Global Depository Receipt : 

ADR-American Depository Receipt.GDR-Global Depository Receipt ADR and GDR

Creative Members : 

Creative Members Dhairya Mehta 28 Payal Mehta 30 Utsav Mehta 31 Dimpy Modi 32

AGENDA : 

AGENDA What is Depository receipt How does it Work? Origin of DR What is ADR and GDR Features of GDR Benefits to investors and co Types of ADR with advantages and disadvantages Specimen of ADR What is the procedure for issuing ADR/GDR Norms that are need to follow by Indian company for issue of ADRs/GDRs Growth Of ADR and GRD. Which all are the Indian Co’s who have Issued ADR and GDR.

What is depository receipt? : 

What is depository receipt? Negotiable (transferable) financial security Foreign publicly listed company Listed in local market. Physical certificate Shares or Debt Security Equity of other countries Example : TCS

How does DR work? : 

How does DR work? Foreign company Listed in Foreign stock Exchange. Certain requirements Over-the-counter

Origin of DR,ADR,GDR. : 

Origin of DR,ADR,GDR. DR – USA (1920) ADR – JPMorgan (1927), for the British retailer Selfridges&Co. GDR – Citibank (1990) Samsung Corporation, Luxemburg Stock Exchange

What is ADR/GDR : 

What is ADR/GDR Indian company Local Custodian bank FEMA/RBI Foreign Investment Bank Custodian Depository Global investors

Features of GDR. : 

Features of GDR. No Voting rights. Project financing in foreign currency Less risky than foreign currency loan LSE & OTC Share Conversion of receipt. Book Runner

Benefits of ADR/GDR : 

Benefits of ADR/GDR Broaden its shareholders base and increase liquidity. ESOP. Dividend is paid in local currency. Decrease in transaction Cost. Foreign investment in competitive costs. No interference in Management. Global brand recognisation. Investors interest & market diversification

Types of ADRs : 

Types of ADRs ADR PROGRAMS LEVEL I LEVEL II LEVEL III RULE144a

Level I : 

Level I Initiated by the issuer Exemption from full SEC reporting requirements Depositary agreement is executed between the issuer and one selected depositary bank Traded over the counter only Set-up costs are minimal Capital raising is not permitted

Level II : 

Level II Comply with the SEC's full registration and reporting requirements Comply with the SEC's other disclosure rules Can be listed any of the stock exchange Recognition It is more expensive and time-consuming

Level III : 

Level III Similar to Level II ADRs Allows the issuer to raise capital through a public offering of ADR SEC reporting is more onerous More expensive than Level I and II ADRs

Rule 144(a) : 

Rule 144(a) Known as a Restricted ADRs (RADR) Sale is made to only QIBs Easy access to Private placement market of US Less expensive as compare to Level III without conforming to the full SEC registration and reporting requirements

SPECIMEN of ADR : 

SPECIMEN of ADR

Procedure of Issuing ADR/GDR : 

Procedure of Issuing ADR/GDR Approvals Appointment of Intermediaries Principal Documentation Additional Key Actions Co-appointment of various agencies. Selection of Syndicate Members Constitution of a task force for due diligence Timing, pricing and size of the issue Book Building and pricing of the issue Closing of the issue Allotment

Norms needs to Follow : 

Norms needs to Follow Foreign Exchange Management Act (FEMA) SEBI Norms RBI norms Companies Act, 1956 Guidelines issued by Central Government

ADR/GDR Provisions : 

ADR/GDR Provisions Indian co. can raise foreign currency through issue of ADRs/GDRs and FCCB under Depository Receipt Mechanism Can issue ADRs/GDRs if company is eligible to issue shares to NRI under FDI schemes Who have been ban to issue shares in indian capital market is not allowed to issue ADRs/GDRs

ADR/GDR Provisions (cont..) : 

ADR/GDR Provisions (cont..) No end use restrictions except for a ban on deployment / investment of such funds in Real Estate or the Stock Market No monetary limit Pricing of ADRs/GDRs Two way fungibility Reporting of ADRs/GDRs

Growth of ADR/GDR : 

Growth of ADR/GDR ADRs and GDRs issuances had fallen to $0.10 billion in 2008 from $2.64 billion in 2007 Number of ADRs and GDRs had also dropped to 4 in 2008 from 15 in 2007 Raised 3.15 billion through ADR/GDR in 2009

Indian ADR Trading in US : 

Indian ADR Trading in US

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