ADRs, GDRs and overseas listing
How a company's shares can be owned and traded abroad, through a receipt or by listing directly
Rules in force on 16 October 2026
Verified 16 October 2026
For training and education only. Not investment advice.
Trainer notes
Ask the room: if someone in New York wants to own an Indian company's shares but the shares trade only in Mumbai, how can they buy in? This deck gives two answers: a depositary receipt, and a direct overseas listing.
A depositary receipt lets someone abroad own a company's shares via a certificate traded on a local exchange.
The shares stay in the home country with a custodian. A depositary bank issues receipts against them, in dollars or another currency, which then trade like any local share.
Trainer notes
The share itself never leaves home. What crosses the border is a certificate that stands for the share. Hold this picture; the rest of the deck fills it in.
The four moving parts
The shares
The company's ordinary (underlying) shares, kept in its home country with a local custodian bank.
Depositary bank
A bank abroad that issues receipts against the shares, held via the home custodian.
The receipt
What the investor buys and sells: an ADR in the US, a GDR elsewhere. It trades like a share.
The ratio
How many underlying shares each receipt stands for: one, several, or a fraction.
Take-away: Buy the receipt and you hold a claim on the shares behind it, priced in the receipt's own currency.
Source: SEC Office of Investor Education, Investor Bulletin on American Depositary Receipts.
Trainer notes
ADR = American Depositary Receipt; GDR = Global Depositary Receipt. The custodian in the home country and the depositary bank abroad are the two institutions that make the link work.
ADR and GDR, side by side
| Feature | ADR | GDR |
|---|---|---|
| Full name | American Depositary Receipt. | Global Depositary Receipt. |
| Where it trades | A US market: NYSE, NASDAQ or over-the-counter. | Exchanges outside the US, often London or Luxembourg. |
| Currency | US dollars. | US dollars or euros, set by the issue. |
| Typical investors | Retail and institutional; often more actively traded. | Mainly institutional; often less actively traded. |
| Listing reach | One US market at a time. | Can be listed in more than one market at once. |
Sources: SEC Investor Bulletin on ADRs; Companies Act, 2013, s.2(44) (definition of GDR); Depository Receipts Scheme, 2014.
Trainer notes
Both are depositary receipts; the labels mark where they trade. A GDR issue can be listed in two or more markets at once; an ADR programme is aimed at the US market.
What an ADR is worth
ONE FOREIGN SHARE
A company's share trades at 150 units of its home currency.
The exchange rate is 75 of those units to US$1. The depositary bundles 5 shares into one ADR.
- One share in dollars: 150 ÷ 75 = US$2. A ratio can set a different price per receipt.
- Bundle 5 shares into one ADR: 5 × US$2 = US$10. The ratio sets the price per ADR.
- Once it is trading, the ADR's price is set by supply and demand, like any share.
- If the two prices drift apart, traders buy the lower-priced and sell the higher-priced, narrowing the gap.
Result: An ADR's underlying value = the home share price, converted to dollars, times the ratio.
Illustration with assumed figures, including an invented exchange rate. Not a quote for any company.
Trainer notes
The ratio exists so the receipt sits in a sensible price range for the host market. Dividends are likewise converted and paid in the receipt's currency, net of the depositary's fee.
How a sponsored ADR is created
Company and bank agree
The company signs up a depositary bank abroad to run the programme and handle investor services.
Shares are deposited
The required shares are placed with a custodian bank in the company's home country.
Receipts are issued
The depositary bank issues ADRs against those shares, each standing for the agreed number of shares.
ADRs trade abroad
Investors buy and sell the ADRs on a US market or over-the-counter, in US dollars.
Dividends flow through
The bank collects dividends at home, converts them and pays ADR holders in dollars, net of its fee.
Source: SEC Office of Investor Education, Investor Bulletin on American Depositary Receipts.
Trainer notes
This is a sponsored programme, set up by the company. An unsponsored programme can be started by a broker-dealer without the company's involvement, and such receipts usually carry no voting rights.
Three levels of ADR programme
- I
Level 1
Trades over-the-counter, not on a stock exchange. The lightest level. Cannot be used to raise new money.
- II
Level 2
Listed on a US stock exchange, with fuller SEC reporting (Form 20-F). Still cannot raise new capital.
- III
Level 3
Listed on a US exchange and used to raise fresh capital through a public offering. The strictest disclosure applies.
Take-away: The higher the level, the wider the US access and the heavier the disclosure.
Source: SEC Office of Investor Education, Investor Bulletin on American Depositary Receipts.
Trainer notes
Level 1 is the lightest and most common. Level 3 is the only level that lets the foreign company raise new capital from US investors. GDRs are not graded this way.
A newer route: direct listing at GIFT IFSC
List shares directly
An eligible Indian public company can list its actual shares on an international exchange, with no depositary receipt (listed firms await SEBI norms).
Where
On the International Exchanges at GIFT IFSC: India INX and NSE IX. IFSC is the only permitted jurisdiction so far.
The legal basis
Section 23 of the Companies Act, the Permissible Jurisdictions listing rules of 2024, and amended FEMA rules.
Take-away: Shares list directly and rank with existing equity; a depositary bank is not involved.
Sources: IFSCA press release, 23 Feb 2024; Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, notified 24 Jan 2024.
Trainer notes
Notified 24 January 2024. IFSC is the permissible jurisdiction; exchanges are India INX and NSE IX. Shares are dematerialised and rank with existing equity. Listed companies await SEBI's operating guidelines.
If you learnt this from older material
Older decks say
- ADRs and GDRs are the main way to list shares abroad.
- Depository receipts follow the 1993 framework.
- Only the company itself can set up a receipt programme.
What holds now
- 2024 rules allow direct IFSC listing; SEBI norms for listed firms due.
- Depository Receipts Scheme, 2014 applies (34 jurisdictions listed at launch).
- Unsponsored receipts, started without the company, are also allowed.
Take-away: A Jan 2023 report found Indian ADR/GDR fundraising rare since 2017; direct IFSC listing is newer.
Sources: Depository Receipts Scheme, 2014 (effective 15 Dec 2014); 2024 Permissible Jurisdictions Rules; Business Standard, 24 Jan 2023 (PRIME data).
Trainer notes
The 2014 Scheme replaced the 1993 regime for depositary receipts (FCCB part continues) and widened the eligible jurisdictions. The direct-listing route is newer still. Several Indian programmes were wound down by 2023.
Four things people get wrong
Misconception'An ADR is a different company's stock.'
What is trueIt is a claim on the same company's shares, packaged to trade on a foreign market in foreign currency.
Misconception'ADR and GDR mean the same thing.'
What is trueAn ADR trades in the US; a GDR trades elsewhere, often London or Luxembourg, and can span several markets.
Misconception'The ADR price can wander off freely.'
What is trueIt tracks the home share price converted to dollars, times the ratio. Trading keeps the two in line.
Misconception'Overseas listing means only ADRs or GDRs.'
What is trueUnder 2024 rules, eligible public companies can also list shares directly at GIFT City; listed firms await SEBI norms.
Trainer notes
On the third point, fees and taxes can create small, lasting gaps; the link is close, not exact. On the last point, the direct route is open to eligible public companies, subject to the 2024 rules.
Check yourself
Question 1: A receipt bundles 4 home shares. Each share is worth US$3 after converting from the home currency. What is the receipt's underlying value?
Answer: 4 × US$3 = US$12. The receipt's underlying value is the dollar share price times the ratio (shares per receipt).Question 2: What is the main difference between an ADR and a GDR?
Answer: An ADR trades on a US market; a GDR trades on exchanges outside the US, such as London or Luxembourg, and can be listed in more than one market at once.Question 3: Name one way, besides an ADR or GDR, that an Indian company's shares can reach overseas investors today.
Answer: Direct listing of its shares on an International Exchange at GIFT IFSC (India INX or NSE IX), under the framework notified in January 2024.
Sources and disclaimer
Sources for the figures in this explainer
- What an ADR is, sponsored vs unsponsored, and the three levels (OTC; exchange-listed; capital-raising): SEC Office of Investor Education, Investor Bulletin on American Depositary Receipts.
- Definition of a Global Depository Receipt: Companies Act, 2013, section 2(44).
- Depository Receipts Scheme, 2014: notified 21 Oct 2014, effective 15 Dec 2014; replaced the 1993 framework for DRs; allows unsponsored DRs; 34 jurisdictions at launch (RBI; DEA).
- Direct listing on GIFT IFSC exchanges (India INX, NSE IX): IFSCA, 23 Feb 2024; Permissible Jurisdictions Rules, 2024 and FEMA (NDI) Amendment Rules, 2024 (24 Jan 2024); Companies Act s.23.
- Fresh ADR/GDR capital-raising by Indian firms rare since 2017: Business Standard, 24 January 2023, citing PRIME Database.
- The ADR pricing example uses assumed figures and an invented exchange rate. It is not a quote for any company.
This material is for training and investor education only. It is not investment, tax or legal advice and is not a recommendation to buy, sell or hold any security or scheme. Examples use assumed figures unless a source and date are shown. Mutual fund investments are subject to market risks; read all scheme related documents carefully. Trustner Asset Services Pvt. Ltd. is an AMFI-registered Mutual Fund Distributor (ARN-286886).