American depository receipts meaning

An American depository receipt (commonly, American depositary receipt or ADR) is a negotiable certificate issued by a US depositary bank representing a specified number (or fraction) of a non‑US company’s shares held by a custodian. It enables those interests to be priced and traded in US dollars on US exchanges (such as NYSE or Nasdaq) or over the counter, as US securities. In UK and Irish legal practice, ADR is a market term rather than one defined in domestic legislation or case law. Rights arise under a US‑law deposit agreement among the issuer, the depositary and ADR holders, and the instruments are regulated under the US Securities Act of 1933 and the Securities Exchange Act of 1934. Key legal features include: indirect ownership (holders are not registered shareholders of the issuer); economic entitlements (dividends and other distributions collected by the depositary and paid in US dollars, net of fees and taxes); and voting exercised via the depositary on the holder’s instructions. Each certificate commonly evidences American depositary shares (ADSs). ADRs are used to facilitate access to US capital markets (including SEC‑registered, Rule 144A or Regulation S programmes), for listings, secondary trading and employee share plans. Usage and meaning are consistent across England...