Explaiu the meaning and merits of GDRs.

1.	Explaiu the meaning and merits of GDRs.
Answer» A global depository receipt is an instrument in the form of a depository receipt or certificate, denominated in U.S dollar, created by an overseas Depository Bank outside India, and issued to non-resident Investors against the issue of ordinary shares or foreign currency convertible bonds of the issuing company. Merits of GDRs: 1. There are less administrative formalities as regards dividend payment on GDRs. 2. There are less formalities connected with the issue of GDRs. 3. The cost of raising funds through GDRs from international markets is less as compared to domestic issues. 4. GDRs help in tapping international capital for domestic companies. 5. GDRs offer comparatively better share values as compared to domestic issues. 6. GDRs enhance the image of the company that has issued them. 7. GDRs broaden shareholders base!

Answer»

A global depository receipt is an instrument in the form of a depository receipt or certificate, denominated in U.S dollar, created by an overseas Depository Bank outside India, and issued to non-resident Investors against the issue of ordinary shares or foreign currency convertible bonds of the issuing company.

Merits of GDRs:

1. There are less administrative formalities as regards dividend payment on GDRs.

2. There are less formalities connected with the issue of GDRs.

3. The cost of raising funds through GDRs from international markets is less as compared to domestic issues.

4. GDRs help in tapping international capital for domestic companies.

5. GDRs offer comparatively better share values as compared to domestic issues.

6. GDRs enhance the image of the company that has issued them.

7. GDRs broaden shareholders base!

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