What Is an ADR, and How Is It Different From a Regular Stock?
Mar 21, · 1 decade ago. This is the capital of the company. Ordinary shares. Includes Preferred shares unlike another answer. (Preferred Ordinary, A/B Ord., Ord Non-voting etc.) As opposed to debt (Loan Stoock, Debentures etc.). ORD SHS just means ordinary share. ADR means American Depository Receipt. A bank might buy some regular shares of a foreign company, and then issue American Depository Receipts, so that Americans can easily invest in that company. Each ADR could represent more .
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Looking for online definition of SHS or what SHS stands for? SHS is listed in the World's largest and most authoritative dictionary database of abbreviations and acronyms The Free Dictionary. About ALIBABA GROUP HOLDING LTD SPON ADS EACH REP 8 ORD SHS Alibaba Group Holding Limited is an online and mobile commerce company. The Company operates its ecosystem as a platform for third parties. View All Events About SEA LIMITED ADS EACH REP ONE CLASS A ORD SHS Sea Ltd. (Singapore) is an internet and mobile platform company, which engages in the provision of online gaming services. It operates through the following segments: Digital Entertainment, E .
American depositary receipts, or ADRs, are stocks that trade on U. That means they give American investors a simple way to invest in potentially international companies. This article will give you the basics of investing in ADRs without making rookie mistakes.
Below you'll learn more about what ADRs are, how they're created, and how they're different from "regular" stocks. ADRs were created so investors could avoid the complexities of buying foreign stocks.
If you want to buy a foreign stock that's not offered as an ADR, you have to exchange your U. In addition, the exchange rate on the U. ADRs are created when a non-U. For example, if I were an investor with shares of a European company purchased on a European stock exchange , and I contacted a U. In this example, I also could give back my ADRs to the depositary bank and receive shares of the foreign company's stock again.
ADRs can be "sponsored" or "unsponsored. Unsponsored ADRs, on the other hand, are set up without the non-U. Typically, broker-dealers initiate unsponsored ADRs when they wish to establish a U.
An ADR can represent a one-for-one exchange with the foreign shares, a fraction of a share, or multiple shares. This is one major way in which traditional U. This is an important consideration, so let's go through an example.
Assume country A the foreign country has an exchange rate with the U. Assume company ABC Corp. When ABC Corp. Then, this ADR would trade on a U. Be sure to look at the ADR's "conversion ratio," which indicates the number of shares of the underlying foreign security that are equivalent to one ADR share.
For example, if an ADR's conversion ratio were to 1, then a single ADR share would represent shares of the underlying security. The per-share data can be determined based on the underlying common stock or the ADR. In our ABC Corp. Level 1 ADRs have minimal SEC reporting requirements, and they're not required to file quarterly or annual reports in compliance with U. The lower amount of reliable information makes level 1 ADRs riskier for investors.
An "IPO" is when a company's stock first becomes available to be purchased on major U. Level 3 ADRs therefore have the added ability to raise capital through a public offering on U. For more information, read this page on the SEC website. ADRs are subject to additional fees that traditional stocks don't carry. These are periodic service fees or "pass-through fees" that compensate the depositary bank for providing custodial services. Taxes are another area where ADRs differ from traditional stocks.
ADRs are subject to the same U. Many foreign governments automatically withhold taxes on dividends paid by companies incorporated within their borders. This generally means that a certain percentage of the dividend you receive may be withheld by your broker, depending on the foreign country's tax rates and regulations. This can get a little complicated, as the U. Additionally, the dividend taxes you pay to foreign countries can usually be deducted from the dividend tax you owe the U.
In any event, it's best to consult a tax professional for the specifics, but remember that ADRs are taxed differently from traditional stocks. Lastly, even though they trade on U. This can make ADR prices more volatile.
First, determine what "level" an ADR is before purchasing it. If you wouldn't purchase penny stocks in the U. Level 3 ADRs are the easiest to compare to U. These are foreign stocks, after all. Investing Best Accounts. Stock Market Basics.
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