ADR / ADS
A US-listed receipt representing shares of a foreign company held by a depositary bank abroad.
An American Depositary Receipt is a negotiable certificate issued by a US depositary bank representing a defined number of a foreign issuer's home-market shares; the American Depositary Share is the unit of trading it represents. ADRs let US investors hold foreign equity in dollars through US settlement, but the holder's relationship is with the depositary, not directly with the issuer, and the deposit agreement governs voting, dividends, and fees.
In detail
An ADR exists because a depositary bank holds home-market shares with a custodian in the issuer's country and issues receipts against them. The ratio matters and is arbitrary: one ADS may represent one ordinary share, ten, a hundred, or a fraction of one. The ratio is set in the deposit agreement, can be changed by the depositary, and a ratio change will move the ADS price mechanically without any change in the underlying company.
ADRs come to exist through registration of the receipts on Form F-6, which registers the depositary receipts themselves rather than the underlying business. Sponsored programs are established with the issuer's cooperation and a deposit agreement; unsponsored programs may be established by a depositary without issuer involvement. Programs are conventionally described in levels: a Level I program trades over the counter with minimal disclosure; a Level II program is exchange-listed and brings the issuer into the Exchange Act reporting regime for foreign private issuers; a Level III program is exchange-listed and involves a capital raise. Foreign private issuers report on Form 20-F annually and furnish material home-market disclosure on Form 6-K rather than filing 10-K, 10-Q, and 8-K.
A holder owns a beneficial interest in the deposited shares, exercised through the depositary, and can generally surrender ADSs to the depositary and take delivery of the local shares, subject to fees and local-market eligibility. Voting is passed through per the deposit agreement and is often subject to cut-off dates well ahead of the home-market meeting; some agreements permit discretionary voting by the depositary if the holder does not instruct. Dividends arrive converted into dollars, net of home-country withholding and net of depositary fees. Depositary service fees are charged periodically and are frequently the difference between the ADR's stated yield and the holder's realized yield.
Lifecycle events: program establishment and amendment appear on F-6 and F-6 POS; issuer results and material events arrive as 20-F and 6-K; ratio changes, program termination, and depositary succession are announced by the depositary and may appear in 6-K; a going-private or takeover in the home market may be executed under home-country law with a Schedule TO or 13E-3 only where US rules reach it.
Before assuming anything, check the current ADS-to-ordinary ratio, whether the program is sponsored, which reporting form the issuer uses, what the depositary fee schedule is, whether sanctions or market-access rules constrain the position, and whether the home market and the US listing can diverge on trading days and corporate-action timing. "ADR" and "ADS" are used loosely in market copy; the deposit agreement and the filings carry the precise structure.
These values are read from the filing linked above. They describe the instrument, not its merits. Nothing here is investment advice.