Definitions for "American Depositary Receipts"
ADRS merely represent SHARES in a corporation that is incorporated outside the U.S. A U.S. bank holds the underlying foreign security, known as Depositary Shares, in one of its branches abroad. A negotiable receipt covering the foreign Depositary Shares is then issued and traded in the U.S. (The Morgan Guaranty Trust Company and the Bank of New York are large issuers of ADRS.) The ADR holders retain almost all of the rights that shareholders of the underlying securities do, but dividends and share pricing are in U.S. dollars. In the past, ADR trading was done almost exclusively on the OVER-THE-COUNTER (OTC) market, but both NASDAQ and the NYSE now have numerous ADR listings.
ADRs are securities offered by non-U.S. companies who want to list on an American exchange. Each ADR represents a certain number of a company's regular shares.