ADR vs GDR

American Depositary Receipts (ADRs) enable US investors to acquire and trade non-US securities denominated in US dollars. They can be listed on a major US Stock Exchange. A capital raising ADR requires the issuer to submit a Form F-1 to the SEC. They are usually listed on one of the major US exchanges, which enhances the issuer's name recognition in the US. SEC reporting is required

Global Depositary Receipts (GDRs) give access to two or more markets, most frequently the US market and the Euromarkets, with one fungible security. GDRs are most commonly used when the issuer is raising capital in the local market as well as in the international and US markets, either through private placement or public offerings. The Euromarket component is often listed on a major European exchange. The US component of a GDR is normally structured either as a Level III ADR with full disclosure and reporting to the SEC, or privately placed under Rule 144(a), in which case full compliance with the SEC's onerous reporting and registration requirements is avoided.

What is the difference between a Level I, Level II and Level III programme?

A Level I sponsored ADR program is the easiest and least expensive means for a company to provide for issuance of its shares in ADR form in the US. A Level I program involves the filing of an F-6 registration statement, but allows for exemption under Rule12g 3-2(b) from full SEC reporting requirements. The issuer has a certain amount of control over the ADRs issued under a sponsored Level I program, since a depositary agreement is executed between the issuer and one selected depositary bank. Level I ADRs can however only be traded over-the-counter and cannot be listed on a national exchange in the US.


A sponsored Level II ADR must comply with the SEC's full registration and reporting requirements. In addition to filing an F-6 registration statement, the issuer is also required to file SEC Form 20-F (see chapter 6 for details) and to comply with the SEC's other disclosure rules, including submission of its annual report which must be prepared in accordance with US Generally Accepted Accounting Principles (GAAP). Registration allows the issuer to list its ADRs on one of the three major national stock exchanges, namely the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), or the National Association of Securities Dealers Automated Quotation (NASDAQ) Stock Market, each of which has reporting and disclosure requirements. Level II sponsored programs are initiated by non-US companies to give US investors access to their stock in the US. As with a Level I program, a depositary agreement is signed between the issuer and a depositary bank.

Level III sponsored ADRs are similar to Level II ADRs in that the issuer initiates the program, deals with one depositary bank, lists on one of the major US exchanges, and files Form F-6 and 20-F registration statements with the SEC. The major difference is that a Level III program allows the issuer to raise capital through a public offering of ADRs in the US and this requires the issuer to submit a Form F-1 to the SEC.

Form 13F is the reporting form filed by institutional investment managers pursuant to Section 13(f) of the Securities Exchange Act of 1934. Congress passed Section 13(f) of the Securities Exchange Act in 1975 in order to increase the public availability of information regarding the securities holdings of institutional investors. Institutional investment managers that use the United States mail (or other means or instrumentality of interstate commerce) in the course of their business and that exercise investment discretion over $100 million or more in Section 13(f) securities must file Form 13F. They must file no later than 45 days after the end of the March, June, September, and December quarters.