HERE’S AN EXCERPT FROM THE ULTIMATE GOING PUBLIC BOOK: “SEEKING YOUR FORTUNE“
To learn more about how you can Go Public using whichever of the various IPO Alternatives is right for you:
Going Public – American Depository Receipts (ADR’s) – Page 92
Foreign companies can also register to have their shares traded in a form, other than their original form, as American Depositary Receipts, or ADRs. The foreign company deposits its shares with a U.S. depositary bank. The bank holds these American Depositary Shares, or ADSs, and issues ADRs. The deposit agreement between a foreign company and a U.S. depositary bank creates a sponsored ADR program. This deposit agreement is filed with the SEC using Form F-6.
A Depositary Receipt is a negotiable U.S. security that represents a company’s publicly traded equity or debt. Depositary Receipts are created when a broker/dealer purchases a non-U.S. company’s shares on its home stock market and delivers the shares to the depositary’s local custodian bank, and then instructs the depositary bank to issue Depositary Receipts. In addition, Depositary Receipts may also be purchased in the U.S. secondary trading market. They may trade freely, just like any other security, either on an exchange or in the over-the-counter market and can be used to raise capital.
Here’s more about “American Depository Receipts.“