Q.What is the difference between GDR and ADR? Explain.

Indian companies can raise foreign-currency funds abroad by issuing depository receipts against their shares, and GDRs and ADRs are two such instruments that differ mainly in who can hold them and where they are traded. …

Global Depository Receipt (GDR)

• A company's local-currency shares are delivered to a depository bank, which issues depository receipts against them; when denominated in US dollars these are GDRs.
• A GDR is a negotiable instrument, freely traded like any other security.
• In the Indian context, a GDR is issued abroad by an Indian company to raise funds in foreign currency and is listed and traded on a foreign stock exchange; the holder can convert it into the shares it represents at any time and enjoys rights to dividend and capital appreciation.
• Indian companies such as Infosys, Reliance, Wipro and ICICI have raised money through GDRs.

American Depository Receipt (ADR)

• Depository receipts issued by a company in the USA.
• They are bought and sold in American markets like regular stocks.
• An ADR is similar to a GDR except that it can be issued only to American citizens and can be listed and traded only on a US stock exchange.

Points of difference …