Depositary Receipt (DR)

The depositary receipt is a negotiable instrument which represents the beneficial ownership in the shares of a foreign company held in a custodian bank in the company’s country. Depositary receipts are managed by a depositary bank for the benefit of the issuing company, and serves as the intermediary between the company and the DR investors. A DR stipulates the DR ratio, which is the ratio of DR shares to the underlying shares. A DR can be exchanged for the underlying shares by the investor by sending the appropriate instructions to the depositary bank, which will cancel the DR and transfer the ownership of the underlying shares to the investor after the payment of the appropriate fees.

Global Depositary Receipts (GDRs)