Concept of depository receipts
1 answersQuestion asked ( August 19, 2009 , Shopping / Finance )
Are depository receipts a new concept? I heard from someone that they would soon be replacing the concept of share and stocks. Is this true?
Answers to : receipts...
Answer
Depositary receipt (DR) is a certificate which is negotiable and which represents the equity instrument held on deposit by the custodian bank. Once it is deposited a certificate of receipt is issued. The certificate is normally registered. The depositary receipt is the evidence of ordinary shares held in custody other than the country where the instrument is normally traded. It shows the number of underlying shares which have been deposited.
The terms of the deposits may be different from the underlying equity. For example terms like currency of issue, value of denomination and ownership rights. The holder of the depositary receipts are entitled to the dividends, but it is paid in same currency in which the receipt is issued.
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