Global depository Receipt (GDR)

Ans. If the Indian Companies have to list their shares in a foreign stock exchange it uses GDR or ADR to list it indirectly.

In USA and Europe GDR and ADR are used in stock exchange as there are Dollar / Euro denominated instrument. Indian companies also raise capital in the international market through GDR/ADR company issues shares to "depositary". Bank of New York Citigroup etc, an intermediary which acts as foreign Depositary Bank. Depositary Banks issue GDR's and ADR's to investors against their shares.

Depository Receipts have fixed number of shares. They are listed on stock exchange. These are sold to the people of foreign countries. The prices of DR's fluctuate depending on the demand and supply of DR.

Depositary ges divided in home currency and converts it into currency of investors and pay's dividend.