What Is a Depositary Receipt?

Depository Receipts (DR), also known as deposit receipts or stock certificates, refer to transferable vouchers representing securities of foreign companies that circulate in the securities market of a country and are issued by the depositary. Funds issued in China that represent equity in overseas underlying securities. Financial derivatives that are part of the company's financing business. Depositary receipts generally represent company stocks, but sometimes also bonds.

Depositary receipt

Depositary Receipts (DR) refer to transferable certificates representing securities of foreign companies that circulate in the securities market of a country.

The rapid development of depositary receipts is not only attractive to issuers and investors aside from the background of international capital market internationalization.

Share of depositary receipts investment in U.S. capital markets

The law application problem in the operation of depositary receipts is to accurately determine the applicable law in the legal relationship of depositary receipts. Governing law refers to the specific substantive norms that determine the rights and obligations of parties in international civil relations through the guidance of conflict norms. It must be a substantive law that can determine the rights and obligations of the parties; it must be a substantive law guided by conflicting norms; it should be a specific substantive law norm or legal document, not a general legal system or legal system.

It can be seen from the laws and regulations of various countries and regions such as the United States that the law application problem in the operation of depositary receipts, the law of the place of action (lexlociactus), that is, the law of the jurisdiction where the legal act takes place, plays an extremely important role. Whether it is the issuance or transaction of depositary receipts or the applicable law of the depositary agreement, the law of the place where the depositary receipts are issued shall prevail. This is because deregulation of financial means

1. Classified by the role of the issuer of the underlying securities in the DR issue

According to the role of the issuer of the underlying securities in the DR issue process, DR can be divided into participating DR (Sponsored DR) and non-participating DR (Unsponsored DR). Because the DR degree of participating DR is much higher than that of non-participating DR, it gradually becomes the mainstream of DR.

2. Classified by issue scope

According to the scope of issuance and circulation, depositary receipts can be divided into American Depositary Receipts (ADR) Global Depository Receipts (GDR) and Singapore Depositary Receipts (SDR).