Global Depositary Receipt (GDR)

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Definition of 'Global Depositary Receipt (GDR)'

A Global Depositary Receipt (GDR) is a negotiable certificate issued by a bank that represents a specified number of shares of a foreign company's stock. GDRs are traded on international exchanges and are often used by companies to raise capital in foreign markets.

There are several advantages to using GDRs. First, they allow companies to access a wider pool of investors than they would if they only listed their shares on a single stock exchange. Second, GDRs can be denominated in a variety of currencies, which makes them more attractive to investors from different countries. Third, GDRs are often subject to less regulation than domestic shares, which can make them more attractive to investors.

However, there are also some disadvantages to using GDRs. First, they can be more expensive to issue than domestic shares. Second, GDRs may not offer the same level of voting rights as domestic shares. Third, GDRs may be subject to different tax rules than domestic shares.

Overall, GDRs can be a useful tool for companies looking to raise capital in foreign markets. However, companies should carefully consider the advantages and disadvantages of GDRs before deciding whether to use them.

Here are some additional details about GDRs:

* GDRs are typically issued in bearer form, which means that the holder of the GDR is entitled to the underlying shares, regardless of who owns the GDR.
* GDRs are often listed on multiple stock exchanges, which gives investors the ability to trade them in different markets.
* GDRs are typically backed by a trust agreement, which ensures that the underlying shares are held in safekeeping.
* GDRs are subject to the laws of the country in which they are issued.

If you are considering investing in GDRs, it is important to understand the risks involved. You should consult with a financial advisor before making any investment decisions.

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