Global Depository Receipt (GDR) is a financial instrument that allows companies to raise capital from international markets by offering shares to foreign investors. It represents ownership of shares in a foreign company and is traded on international stock exchanges, typically in Europe or Asia. GDRs make it easier for investors worldwide to invest in companies from different countries without dealing with the complexities of local markets.

In essence, a GDR is issued by a depository bank that holds the underlying shares of the issuing company. Each GDR represents a specific number of these shares. Investors buy and sell GDRs in foreign currencies, such as the US Dollar or Euro, allowing them to diversify their portfolios beyond domestic boundaries.

From a companyís perspective, issuing GDRs helps access global investors, enhance liquidity, and improve international visibility. It is a popular route for Indian companies to raise funds abroad without being directly listed on multiple foreign exchanges. For investors, GDRs offer a convenient way to gain exposure to emerging markets and benefit from their growth potential.

Key features of GDRs include:

• International trading: GDRs are listed and traded on foreign exchanges such as the London or Luxembourg Stock Exchange.
• Ease of investment: Simplifies cross-border investment by avoiding direct foreign ownership restrictions.
• Dividends and rights: Investors receive dividends and other benefits similar to ordinary shareholders.

In summary, a Global Depository Receipt (GDR) acts as a bridge between global investors and domestic companies, facilitating capital inflow, expanding market reach, and supporting the global integration of capital markets.