ADR
Also known as: American Depositary Receipt · ADS
DEFINITION
An American Depositary Receipt is a US-issued security backed by shares of a foreign company held in custody by a depositary bank. ADRs trade on US exchanges in US dollars, pay dividends in dollars after currency conversion, and bypass most logistics of holding foreign shares directly. Sponsored ADRs (Level II/III, e.g., ASML, TSMC) require the underlying company to comply with SEC reporting (20-F, 6-K).
WHY IT MATTERS FOR RETAIL INVESTORS
ADRs let you own foreign companies easily, but they are not the same as the underlying shares. Watch for ADR fees (typically 1-5¢ per share per year), reduced voting rights, and the gap between ADR and home-market prices that can persist around dividends. For Chinese ADRs specifically, layer in political/regulatory risk that is unique relative to the underlying.
OFFICIAL SEC SOURCE
https://www.sec.gov/fast-answers/answersadrhtm.html ↗RELATED TERMS
See ADR in a real filing
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