International Banking Final

7/27/2019 International Banking Final

1/31


2/31


3/31

INTRODUCTIONTYPES OF ADRADVANTAGES OF ADR/ GDRDISADVANTAGES OF ADR/GDRLEGAL FRAMEWORK IN INDIAADR/GDR RIGHTS UNDER RBI LENSDISTINGUISH BETWEEN ADR /GDRFUNGIBILITY AND TYPES OF FUNGIBILITYCOMPANIES INVOLVED IN ADR/GDRCONCLUSION


4/31


5/31


6/31


7/31


8/31

Recently SEBI has issued guidelinesfor foreign companies who wish toraise capital in India by issuingIndian Depository Receipts. Thus,IDRs will be transferable securitiesto be listed on Indian stockexchanges in the form of depositoryreceipts. Such IDRs will be createdby a Domestic Depositories in Indiaagainst the underlying equity sharesof the issuing company which isincorporated outside India.


9/31

A Bank Certificate Issued In More Than

One Country For Shares In A Foreign

Company.

Offered For Sale Globally Through The

Various Banks Branches.

Shares Trade As Domestic Shares.


10/31


11/31

UNSPONSORED

ADR

SPONSORED

ADR

LEVEL 1 LEVEL 2 LEVEL 3


12/31

1.TRADED ON THE OVER THE COUNTER (OTC)MARKET

2.ISSUED IN ACCORDANCE WITH MARKET DEMAND AND

THE FOREIGN COMPANY

3.SEC RULE-OCTOBER 2008

UNSPONSORED ADR


13/31


14/31

1.REGISTERATION WITH THE U.S SEC AND IS UNDER SEC REGULATION

2.FILE WITH FORM 20-F ANNUALLY

3.FOLLOWS U.S GAAP STANDARDS OR IFRS

4.LISTING REQUIREMENT

SPONSORED LEVEL

2(LISTING FACILITY)


15/31

1.HIGHEST LEVEL OF FOREIGN CURRENCY CAN SPONSOR

2.ISSUING SHARE TO RAISE CAPITAL

3.FILE WITH FORM F-1 AND FORM 20-F

4.ISSUE MATERIALS THAT ARE MORE INFORMATIVE AND

MORE ACCOMMODATING TO THEIR U.S SHAREHOLDER.

SPONSERED LEVEL

3(OFFERING FACILITY)


16/31

PRIVATELY PLACED(SEC RULE144A)ADR1.PRIVATE PLACEMENT

2.TRADED BY QUALIFIED INSTITUTIONAL BUYERS3.DEPOSITORY TRUST AND CLEARING CORPORATION

COMPANIES INFORMATION1.IT IS AN SECURED SECURITY2.FIXED RATE OF INTEREST IS PAID3.CAN BE CONVERTED INTO MULTIPLE SHARES.


17/31

1 Buy and Sell

2 No Need for Foreign Brokerage Account

3 Prices quoted in U.S. Dollars

4 Clearing and Settlement Procedures as

American Stocks.

5 Customized Portfolio


18/31

1 Limited Selection.

2 Liquidity.

3 Exchange Rate Risk.

4

Ensure AdequateDiversification


19/31

1 Allow Investors to hold shares in Foreign

Countries.

2 Facilitates Easy Trading Method.

3

One can buy as many stocks in any Foreign

company

4

Not restricted by Investment Objective

5 Transfer Taxes and Local Taxes.


20/31

1

One has to pay the currency

conversion if one buy shares outside

American.

2 Depository Ratio determines the price

of GDR.


21/31


22/31

ADR/GDR RIGHTS RBI LENS


23/31

TYPES OF FUNGIBILITY

One Way Fungibility

Two Way Fungibility


24/31


25/31

ONE WAY OF FUNGIBILITY

The fungibility is the conversion process. It impliesthat an investor can convert the ADRs/GDRs intolocal shares. An arbitrage opportunity, in the formof premium quoted in the stock exchange, is createddue to market segmentation.


26/31

Two-way fungibility implies that an investor canconvert ADRs/GDRs into local shares and re-convert local shares into ADRs/GDRs up to alimit of the original ADRs/GDRs issue. If, theinvestor converts the ADRs/GDRs into the localshares by arbitrage opportunities, it is called theforward fungibility.

TWO WAY OF FUNGIBILITY


27/31


28/31

Which Indian companies have

adr and gdr


29/31


30/31


31/31

International Banking Final

Documents

Transcript of International Banking Final