ADR vs GDR – Difference and Comparison

What is ADR?

American Depository Receipt (ADR), is a negotiable certificate, issued by a US bank, denominated in US$ representing securities of a foreign company trading in the United States stock market.

The receipts are a claim against the number of shares underlying. ADR’s are offered for sale to American investors.

By way of ADR, US investors can invest in non-US companies. The dividend is paid to the ADR holders, is in US dollars.

What is GDR?

GDR or Global Depository Receipt is a negotiable instrument used receipts financial markets of various countries with a single instrument.

The receipts are issued by the depository bank, and in more than one country representing a fixed number of shares in a foreign company.

The receipts of GDR can convert into shares by surrendering the receipts to the bank.

GDR is mostly traded in the European Market. Issuing GDR is one of the best ways to raise equity from overseas

Difference Between ADR and GDR

ADR is a depository receipt issued by a US depository bank, against a certain number of shares of non-US company stock, trading in the US stock exchange.

GDR is a negotiable instrument issued by the international depository bank, representing foreign companies’ stock that is offered for sale in the international market.

With the help of ADR, foreign companies can trade in the US stock market, through various bank branches. On the other hand, GDR allows foreign companies to trade in any country’s stock market other than the US stock market, through ODB’s branches.

Comparison Table Between ADR and GDR

Parameter of ComparisonADRGDR
Stands forAmerican Depository ReceiptGlobal Depository Receipt
DefinitionAmerican Depository Receipts (ADR) is a type of negotiable security instrument that is issued by a US bank on behalf of a non-US company, which is trading on the US stock exchange.Global Depository Receipts (GDR) is a type of negotiable instrument that is issued by a foreign depository bank for trading of shares of a company in an international market
Currency traded inUS DollarsUS Dollars and Euro
PurposeTo obtain resources in American Market.To obtain resources in the international market.
Listed inNASDAQListed in Non-US stock exchanges such as LSE (London Stock Exchange) and Euronext (France)
Issued byUS Capital market.European Capital market.