AMERICAN DEPOSITARY RECEIPTS

American Depositary Receipts: translation

Certificates issued in the USA representing the right to ownership of shares in a UK (or other foreign) company. A bank will buy shares in a UK company and issue receipts into the USA in respect of those shares. Typically, one ADR will represent the right to say eight or ten shares in a company. Although the shares are UK-based, the ADR will trade in US dollars. The bank will receive payment of dividends in sterling, but will convert this into dollars to pay to ADR holders. ADRs have the right to vote but are not allowed to participate in rights issues. The purpose of ADRs is to give US investors a convenient way to invest in UK or other foreign companies. Global Depositary Receipts (GDRs) and International Depositary Receipts (IDRs) operate worldwide on the same basis.Dresdner Kleinwort Wasserstein financial glossary

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American Depositary Receipts ( ADRs)

ADRs are a convenient way for domestic investors to own shares in foreign companies. Denominated in US dollars, ADRs allow American investors to invest in a foreign company. However, ADRs are also traded in London. London Stock Exchange Glossary

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Certificates issued by a U.S. depositary bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are "sponsored," the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs. "Unsponsored" ADRs do not receive such assistance. ADRs carry the same currency, political and economic risks as the underlying foreign share; the prices of the two, adjusted for the SDR/ordinary ratio, are kept essentially identical by arbitrage. American depositary shares(ADSs) are a similar form of certification. The New York Times Financial Glossary