ads vs ordinary shares
An American depositary receipt (ADR) is a U.S. bank-issued certificate representing shares in a foreign company for trade on American stock exchanges. Sometimes firms can issue ADS to represent more than one common share each, but usually the ratio is one-to-one. ADRs simplify the process of exchanging foreign shares: since it is only the receipts that are traded, investors do not need to worry about any exchange rate differences or the need to open special brokerage accounts. ADRs are held in the vaults of the U.S. banks that issue them. In other words, the ratio of ADS to common shares is usually one, while the ratio of ADR to ADS can be whatever a company decides to issue them at. For example, Chile and Switzerland withhold 35% while France can withhold as much as 75% of the tax on dividends, in the case of non-cooperative countries within the EU. American depositary receipts (ADRs) allow foreign equities to be traded on U.S. stock exchanges. The entire issuance of shares by a foreign company is called an American Depositary Receipt (ADR), while the individual shares are referred to as ADSs. ADRs can be issued against ADS at any ratio the company chooses. This is one major way in which traditional U.S. stocks differ from ADRs. For example, if a U.S. investor wanted to invest in CanCorp, the investor would need to go to their broker and purchase a number of ADRs that are equal to the amount of CanCorp shares that they want. These ADRs could be issued at a rate of five ADRs equal to one American Depository Share (5:1), or any other ratio the company chooses.
American depositary receipts (ADRs) allow foreign equities to be traded on U.S. stock exchanges. American depositary shares (ADS) come into play when a foreign company wants its shares to trade on a major American exchange as U.S. dollar-denominated equity. Tax treatment of dividends from ADSs is also different. A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. Fluctuations in the exchange rate between the U.S. dollar and the foreign currency will have some effect on the price of shares as well as on any income payments, which must be converted into U.S. dollars. The offers that appear in this table are from partnerships from which Investopedia receives compensation. There are basically two different markets for ADRs and ordinary shares. Foreign companies that offer shares on U.S. exchanges as ADS gain the advantage of a wider investor base, which may lower costs of future capital. An American depositary share (ADS) is an equity share of a non-U.S. company that is held by a U.S. depositary bank and is available for purchase …
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