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Depository Receipts classes for Corporate Restructuring – CS professional

Depository Receipts (DRs)


Depository Receipts means a negotiable instrument issued outside India by a Depository bank, on behalf of an Indian company, which represent the local Rupee denominated equity shares of the company held as deposit by a Custodian bank in India. DRs are traded on Stock Exchanges in the US, Singapore, Luxemburg etc.
Concept of One way Fungibility vs Two way Fungibility
One way Fungibility:
In this, investors could cancel their depository receipt and recover the proceeds by selling the underlying shares in the Indian market; DRs once redeemed could not be converted into shares.
Two-way Fungibility:
  1. After the expiry of lock-in period of 3 years, American ADR holders ask the Indian Brokers (viz Indiabulls / Religare) to purchase their ADRs in lieu of the shares.

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