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BRILLIANT’S Long Term Financing and Valuation of Goodwill & Shares 179

of foreign shares and each ADR is backed by a VWm \$m°aoZ eo`a H$s g§»`m Ho$ ~rM H$m g§~§Y ADR H$m
specific number or fraction of shares in the AZwnmV hmoVm h¡ VWm àË`oH$ ADR \$m°aoZ H$ånZr _| EH$
foreign company. {ZpíMV Z§~a `m eo`a Ho$ A§e Ûmam dmng hmoVo h¢Ÿ&
ADRs are one of the most important items ADR B§Q>aZoeZc BÝdoñQ>g© Ho$ Qy>b {H$Q> H$s ~hþV
in an international investor’s tool kit. Let us _hËdnyU© dñVwAm| _| go EH$ h¡Ÿ& EH$ CXmhaU H$mo coH$a
consider an example, say you are interested in g_PVo h¢, _mZm {H$ Amn \«$m§g _| BÝdoñQ> H$aZo Ho$ BÀNw>H$
investing in France. One option is to open a
h¡Ÿ& EH$ {dH$ën `h h¡ {H$ no[ag _| EH$ ~«moH$aoO AH$mCÝQ>
brokerage account in Paris, wire some money H$mo ImocH$a, Wmo‹S>r _Zr dhm± cJmH$a, AnZo S>m°ca H$mo `yamo
over there, convert your dollars into Euros and _| ~XcH$a {\$a \«|$M ñQ>m°H$ H$s IarXr H$s Om`oŸ& naÝVw,
then go shopping for French stocks. But, this
`h EH$ H${R>Z VWm A{YH$ g_` dmcr à{H«$`m h¡Ÿ& BZ
would be a difficult and time consuming
g_ñ`mAm| H$mo IË_ H$aZo Ho$ {cE ADR H$mo ~Zm`m J`mŸ&
process. ADRs are designed to eliminate these
ADR EH$ {gŠ`y[aQ>r h¡ Omo EH$ \$m°aoZ H$ånZr Ho$ eo`a Ho$
difficulties. An ADR is a security that
represents ownership of shares of a foreign ñdm{_Ëd H$mo àñVwV H$aVr h¡Ÿ& O~ Amn EH$ ADR IarXVo
company. When you buy an ADR, you h¢, V~ dmñV{dH$Vm _| AmnZo \$m°aoZ ñQ>m°H$ H$mo S>m`aoŠQ>cr
technically don’t own the foreign stock directly. Zht IarXm h¡Ÿ& ~Xco _| AmnZo EH$ H$mJO H$m Qw>H$‹S>m
Instead, you own a piece of paper that entitles IarXm h¡ Omo Amn H$s Amoa go {H$gr \$m°aoZ ñQ>m°H$ Ho$ EH$
you to one or more shares of a foreign stock `m Á`mXm eo`a H$mo hmoëS> H$aZo H$m {S>nm°{OQ>ar ~¢H$ H$mo
being held on your behalf at a depository bank. A{YH$ma XoVm h¡Ÿ&

3. The Global Depository Receipts 3. ½cmo~c {S>nm°{OQ>ar [a{gQ>²g (GDRs)
(GDRs)

A GDR is issued and administered by a H$m°nm}aoQ> Bí`yAa Ho$ {cE EH$ {S>nm°{OQ>ar ~¢H$ Ûmam
depository bank for the corporate issuer. The GDR H$mo Bí`y VWm CgH$m g§MmcZ {H$`m OmVm h¡Ÿ&
depository bank is usually located, or has {S>nm°{OQ>ar ~¢H$ gm_mÝ`V: CZ Xoem| _| hmoVr h¡ `m CZH$s
branches, in the countries in which the GDR is
traded. The largest depository banks in the emImE± hmoVr h¡ Ohm± na GDR H$m ì`mnma hmoVm h¡Ÿ& `yZmBQ>oS>
United States are J.P. Morgan, the Bank of New ñQ>oQ> _| g~go ~‹S>r {S>nm°{OQ>ar ~¢H$ Oo.nr. _moJ©Z, ~¢H$
York and Citibank. A GDR is based on a Deposit Am°\$ Ý`y`m°H©$ Ed§ {gQ>r~¢H$ h¡Ÿ& EH$ GDR {S>nm°{OQ>ar ~¢H$
Agreement between the depository bank and VWm H$m°nm}aoQ> Bí`yAa Ho$ ~rM EH$ {S>nm°{OQ>ar EJ«r_|Q> na
the corporate issuer and specifies the duties and AmYm[aV hmoVm h¡ Ed§ àË`oH$ nmQ>u Ho$ AÝ` nmQ>u Ed§ BÝdoñQ>g©
rights of each party, both to the other party XmoZm| Ho$ {cE Xm{`Ëdm| VWm A{YH$mam| H$mo ñno{g\$m` H$aVm
and to the investors. Provisions include setting h¡Ÿ& àmo{dOZ _| [aH$m°S>© S>oQ> goQ> H$aZm, Bí`yAa Ho$ A§S>acmB§J
record dates, voting the issuer’s underlying
shares, depositing the issuer’s shares in the eo`a Ho$ {cE dmoQ> H$aZm, Bí`yAa Ho$ eo`am| H$mo H$ñQ>mo{S>`Z
custodian bank, the sharing of fees and the ~¢H$ _| O_m H$aZm, \$sg H$mo ~m§Q>Zm Ed§ EpŠOŠ`yeZ VWm
execution and delivery or the transfer and the {S>[cdar `m GDR eo`a H$m Q´>m§g\$a Ed§ gaoÝS>a H$aZm
surrender of the GDR shares. gpå_{cV hmoVm h¡Ÿ&
It is a global finance vehicle that allows an `h EH$ ½cmo~c \$m`Z|g ìhrH$c h¡ Omo EH$ ½cmo~c
issuer to raise capital simultaneously in two Am°\$[a¨J Ûmam EH$ Bí`yAa H$mo Xmo `m A{YH$ _mH}$Q> _| EH$
or more markets through a global offering. gmW H¡${nQ>c H$mo ~‹T>mZo H$s AZw_{V XoVm h¡Ÿ& GDR H$m