ADR

What is it? A receipt for stock in a foreign company held in trust by a bank. Buying an ADR, or American depositary receipt, is a simple way for U.S. residents to invest in companies that are not based in the United States. ADRs trade domestically on an exchange or over the counter and are sold through brokerage houses. Each ADR may represent a fraction of an actual share or several shares. The foreign company is directly involved in issuing sponsored ADRs in the U.S. market. It chooses the bank where the shares are held and the brokerages that distribute the ADRs. The company also is responsible for registering the ADRs with the Securities and Exchange Commission. People who buy these ADRs have the right to receive dividends and to vote their shares. In some instances, banks issue unsponsored ADRs without the company?s participation. The bank is responsible for all registration requirements, and these ADRs trade only over the counter. Holders receive dividends but do not have the right to vote.

Added By: Hailey

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