What is GDR and How it Helps Investors

GDR which stands for global depository receipts can be defined as a negotiable instrument which represents publicly traded local currency equity share. A Global Depository Receipt is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. Usually a GDR is denominated in US dollars where seas underlying shares would be denominated in the local currency of the issuer of GDR. Prices of GDR are often close to values of related shares, but they are traded and settled separately than the underlying share.

GDR are considered as common equity of the issuing company and hence are entitled to dividends and voting rights since the date of their issuance. The company which has issued the GDR transacts with only the overseas depositary for all the transactions. GDRs are commonly listed on European stock exchanges such as the London Stock Exchange. GDR can be particularly helpful those persons who are not resident of a country in which they want to invest. Because through GDR those persons can invest in the shares of the company without any problem and hence it is a great alternative of investment for them

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