Global depository receipt

Global depositary receipt (GDR) is a certificate issued by a bank representing shares in two or more foreign stock exchanges/markets. They typically trade on American stock exchange and Eurozone or Asian exchanges. GDRs provide access to foreign capital markets. GDR expands the global presence of the company.

There are two types of GDRs:

• Rule 144A GDRs

• Regulation S GDRs

GDR gives domestic companies access to foreign capital markets and allows foreign investors to invest in domestic companies. It has a complex taxation method. It lacks liquidity but offers international portfolio diversification.

GDRs and their dividends are priced in the local currency of the exchanges where the shares are traded.

The depository receipt allows investors from any country to invest in, hold shares in, and trade in the securities of a company based in another country, allowing shareholders to share in the company's capital gains and dividends.

American depositary receipts, European depository receipts, Global depository receipts, Indian depository receipts are among the types of depository receipts.

When a foreign firm wants to list its publicly traded shares or securities on an international stock exchange, it must first issue a depository receipt.

Before listing its stocks for sale, a corporation must adhere to the stock exchange's special rules.

The depository receipts can be exchanged over the counter in the open market.