What is an American Depository Receipt?
is a certificate which has been issued by a U.S. Depository Bank and can represent a share, fractions of a share, or multiple shares of a foreign stock which the bank is holding overseas. The largest depository bank is the Bank of New York Mellon. The purpose of an ADR is to make it easier for US investors to buy shares in foreign companies by reducing administration costs and avoiding duty on individual transactions.
An American depository receipt, or ADR, is a negotiable certificate that acts as a receipt for any shares of a stock not based in the United States. The stocks that are mentioned in an American depository receipt will be held by a US based financial institution and thus entitle shareholders to the capital gains and dividends that are relevant to the stock. Negotiable certificates like an American depository receipt are one of the instruments that make the trading of foreign stock on a stock exchange possible. The usage of an American depository receipt makes if possible for US citizens to engage in the buying and selling of shares that are issued by companies based in another country, without the need to qualify for trading on a foreign stock market. Instead, the US citizen may engage in these types of investments through a US stock exchange. A United States depository bank issues the American depository receipt. Foreign corporations will have authorized the bank to represent shares of
