What is ADR sponsored?
Sponsored ADR is a way of US citizens to own shares in a foreign company trading on the US financial market. ADR or American depository is a document and an asset that an American citizen legally owns. Sponsored ADR means that the US bank is involved in the process and grants the same voting rights that come with equivalent shares. It may be difficult to let US citizens simply buy foreign stocks due to problems with currency exchange. With a standard stock problem, the investor would have to pay for stocks and accept foreign currency dividends. This brings both transaction costs and uncertainty about the effects of different exchange rates.
The solution is ADR. This is the security that is traded and is valid in American currency. Individual ADR will be considered an equivalent share of the nahraj border company in that proportion. While one ADR can simply match one sharing, it is possible for adR to be equivalent to more sharing or even a fraction of pOdlla.
In its simplest form is the immediate ADR, the only connection of the American bank, to issue adr. This type of ADR can be traded, but effectively exists as an asset in itself. The connection with the shares of the foreign company is free and the holder usually does not have equivalent rights as if it owned a share.
Sponsored ADR works on a more formal basis. The ADR holder will usually have the same voting rights as if she is holding shares. In some cases, the holder may have the right to exchange ADR for the relevant shares, although US investors usually do not have to exercise this right.
There are three levels of sponsored ADR. Level I is an over -the -counter ADR, which means that it can only be traded by direct investors in investors rather than through the stock exchange. Level II means that ADR can be listed on the stock exchange and traded in the same way as sharing American society. LevelIII means that a foreign company can create new shares and publish it in the form of an equivalent ADR. The company will have to follow the US rules on new stock issues and may even be more open and transparent about the details it releases to the public, in an effort to win over potentially skeptical investors.