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178 Corporate Finance BRILLIANT’S

first issued in 1927 by J.P. Morgan. Since, the _| J.P. Morgan Ûmam Bí`y {H$`m J`mŸ& O~ go, US _mH}$Q>
US market has extremely stringent reporting AË`{YH$ g»V [anmo{Q>ªJ _mZXÊS> hþAm h¡, {g\©$ dhr H§$n{Z`m±
norms, only those companies that can meet Omo BZ _mZX§S>m| H$mo nyam H$a nmVr h¢ dhr ADR Bí`y H$a
these norms make an ADR issue. ADRs are one gH$Vr h¢& {OZ \$m°aoZ {gŠ`y[aQ>r H$m ì`mnma A_o[aH$Z _mH}$Q>
or more units of a foreign security traded in _| {H$`m OmVm h¡, ADR CgH$s EH$ `m A{YH$ `y{ZQ> hmo
American market. They are traded just like
regular stock of other corporate but are issued gH$Vr h¡Ÿ& BZH$m ì`mnma AÝ` H$m°nm}aoQ> Ho$ aoJwba ñQ>m°H$ Ho$
in the US by a bank or brokerage. ADRs were g_mZ hr {H$`m OmVm h¡o {H$ÝVw `h EH$ ~¢H$ `m ~«moH$aoO Ûmam
introduced with a view to simplify the physical US _| Bí`y {H$`m OmVm h¡Ÿ& Bggo \$m°aoZ {gŠ`y[aQ>rO H$s
handling and legal technicalities governing {\${OH$c h¢S>qcJ VWm H$mZyZr àmdYmZm| H$mo gac ~ZmZo Ho$
foreign securities, as a result of the complexities {bE ADR Ama§^ {H$`o J`o Wo, {OgH$m n[aUm_ `h hþAm {H$
involved in buying shares in foreign countries. {dXoer Xoem| _| eo`a IarXZo _| O{Q>cVm CËnÞ hmoZo cJrŸ&
Trading in foreign securities is prone to number \$m°aoZ {gŠ`y[aQ>rO _| ì`mnma H$aZo go AZoH$ g_ñ`mAm| H$s
of difficulties like different prices and currency g§^mdZm h¡ O¡go {H$ {d{^Þ H$a§gr VWm àmBgog H$s d¡ë`y _|
values which keeps on changing almost on daily cJ^J à{V{XZ n[adV©Z hmoZmŸ& BZ g_ñ`mAm| H$mo XoIVo hþE
basis. In view of such problems, US banks found
US ~¢H$ Zo EH$ gac _oWmoS>mobm°Or ñWm{nV H$s {Og_o dh
a simple methodology wherein to purchase a
lot of shares from foreign company and then \$m°aoZ H$ånZr go H$B© eo`g© Ho$ bm°Q> IarXVr h¡ VWm CgHo$
bundle these shares into groups and reissue ~mX BZ eo`g© Ho$ J«wn Ho$ A§e BH$Æ>m H$aHo$ BZH$mo dmng go
them and get these quoted on American stock Bí`y H$aVr h¡ VWm CZH$mo A_o[aH$Z ñQ>m°H$ _mH}$Q> _| ŠdmoQ>
markets. H$a XoVr h¡Ÿ&
For the American public, ADRs simplify A_o[aH$Z npãcH$ Ho$ {cE, ADR {Zdoe H$mo gac
investing. So when Americans purchase INFY ~ZmVm h¡Ÿ& Vmo O~ A_o[aH$Ýg Nasdaq na {cñQ>oS> BÝ\$m`
stocks listed on Nasdaq, they do this directly ñQ>m°H$ H$mo IarXVm h¡, V~ dh Cgo én`o _| H$ÝdQ>© {H$`o
in dollars, without converting them from {~Zm grYo S>m°ba go IarXVm h¡Ÿ& EH$ A_o[aH$Z BÝdoñQ>a
rupees. An American investor holding an ADR {OgZo ADR H$mo hmoëS> {H$`m h¡ CZHo$ nmg H$ånZr _| dmoQ>
does not have voting rights in the company. H$aZo H$m A{YH$ma Zht hmoVm h¡Ÿ&
The above indicates that, ADRs are issued Cnamoº$ dU©Z go ñnîQ> h¡ {H$, ADR H$m Bí`y
to offer investment routes that avoid the BÝdoñQ>_|Q> ê$Q> H$mo Am°\$a H$aZo Ho$ {cE hmoVm h¡ Omo _h±Jo
expensive and cumbersome laws that apply VWm O{Q>c H$mZyZ H$mo Xya H$aVm h¡ Omo H$^r-H$^r {dXoer
sometimes to non-citizens buying shares on ZmJ[aH$ na cmoH$b EŠgM|O go eo`a IarXZo na cmJy
local exchanges. ADRs are listed on the NYSE, hmoVm h¡Ÿ& ADRs, NYSE, AMEX `m NASDAQ na
AMEX, or NASDAQ. {cñQ>oS> hmoVo h¢&
ADRs allow investor to conveniently ADR, BÝdoñQ>a H$mo H«$m°g ~m°S>©a Q´>m§OoŠeZ _| AmZo dmbr
invest in foreign securities without the worries ~mYmAm| go gwa{jV aIVo hþE \$m°aoZ {gŠ`mo[a{Q>O _| AmgmZr
that came along with cross-border transa-
go BÝdoñQ> H$aZo H$s gw{dYm XoVm h¡Ÿ& ADR H$m hmoëS>a do g^r
ctions. Holders of ADRs enjoy the same
economic benefits as domestic shareholders of BH$moZm°{_H$ ~o{Z{\$Q>²g àmßV H$aVm h¡ Omo {H$ \$m°aoZ H$ån{Z`m|
foreign companies and the U.S. bank acts as a Ho$ S>mo_opñQ>H$ eo`ahmoëS>a VWm EH$ {S>nm°{OQ>ar Ho$ ê$n _|
depository. The ADR ratio is the relationship
between the number of ADRs and the number H$m`© H$aZo dmbr U.S. ~¢H$ H$mo àmßV hmoVo h¢Ÿ& ADR H$s g§»`m