Depository Receipts(DR) are a type of negotiable financial security, representing a security usually in the form of equity, issued by a foreign publicly listed company.
These DR's are traded on local stock exchange though the foreign public listed company is not traded on the local exchange.
Creation of DR's :- when a foreighn company wants to list its securities on another country,s stock exchange , it can do this through DR's Mode.
The shares of the foreign company, which the DR present , are first of all delivered and deposited with the custodian bank. On receipt of the delivery issues the custodian bank creates DR's and issues the same to investors in the country., where the DR,s are inteded to be listed. These DR's are then listed and traded in the local stock exchanges of that country.
Indian Depository Receipt :-DR's issued by India is known as Indian Depository Receipt(IDR).
foreign companies who wish to raise capital in India can do by issuing IDR.
Thus IDR's will be transferable securities to be listed on Indian stock Exchange in the form of DR's created by a domestic depositories in India against the underlying equity shares of the issuing company which is incorporated outside India(foreign company).
These DR's are traded on local stock exchange though the foreign public listed company is not traded on the local exchange.
- In general, DR's are physical certificates which allow investors to hold share in equity of other countries.
Creation of DR's :- when a foreighn company wants to list its securities on another country,s stock exchange , it can do this through DR's Mode.
The shares of the foreign company, which the DR present , are first of all delivered and deposited with the custodian bank. On receipt of the delivery issues the custodian bank creates DR's and issues the same to investors in the country., where the DR,s are inteded to be listed. These DR's are then listed and traded in the local stock exchanges of that country.
Indian Depository Receipt :-DR's issued by India is known as Indian Depository Receipt(IDR).
foreign companies who wish to raise capital in India can do by issuing IDR.
Thus IDR's will be transferable securities to be listed on Indian stock Exchange in the form of DR's created by a domestic depositories in India against the underlying equity shares of the issuing company which is incorporated outside India(foreign company).
- NRI & FII have not been allowed to purchase IDR's without special permission through RBI.
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