What is an ADR? American Depositary Receipt
An ADR is an American Depositary Receipt, a certificate issued by a US bank that represents shares of a foreign company and trades on US markets in US dollars. It lets a US investor hold a stake in an overseas company without buying the shares on the home exchange. Several Indian companies list this way, such as Infosys and Wipro on the NYSE. Source: SEC EDGAR. This guide explains what an ADR is, the levels, and how to see who owns them. It is not investment advice.
Definition
An ADR
is an American Depositary Receipt, a negotiable certificate issued by a US depositary bank that represents a set number of shares in a foreign company. It trades on US markets in US dollars, and the bank holds the underlying foreign shares through a local custodian. Source: SEC.
What is an ADR and how does it work?
An ADR is a US-traded stand-in for a foreign share. A US depositary bank buys shares of the foreign company on its home market, holds them with a custodian there, and issues receipts against them in the US. Each ADR represents a fixed ratio of ordinary shares, which can be one-to-one, several ADRs per share, or several shares per ADR. The receipt trades like any US stock, settles in dollars, and pays dividends converted into dollars.
What are the levels of an ADR?
The SEC groups ADR programs by how much disclosure the foreign issuer takes on.
| Level | Where it trades | Disclosure |
|---|---|---|
| Level I | Over the counter | Lightest; no full US listing |
| Level II | Listed on a US exchange | Register with the SEC and file a 20-F |
| Level III | Listed, with a capital raise | Level II disclosure plus a registered offering |
Programs are also either sponsored, set up with the company under a deposit agreement, or unsponsored, created by a bank on its own.
Three levels
ADR program levels (I, II, III), rising with the SEC disclosure required
Source: SEC
How do you see who owns a company's ADRs?
Because ADRs trade in the US, US ownership disclosures apply. A large manager holding an ADR reports it on a quarterly 13F filing, and company insiders may file a Form 4. The foreign issuer itself files an annual 20-F and reports events during the year on a Form 6-K. All of these sit on SEC EDGAR.
Where an ADR sits for a smart-money reader
For following ownership, an ADR is convenient: the foreign company's US holders show up in the same 13F and Form 4 data as any domestic stock. If you also follow the company at home, you can read its home-market disclosure such as the shareholding pattern alongside the US filings. For the non-US cousin of the ADR, see ADR vs GDR.
Flock reads disclosure filings and keeps each one dated and linked back to its source, so you can go from a summary to the original filing in one step. What any of it means for your money is your call to make.
Frequently asked questions
What is an ADR in simple terms?
An American Depositary Receipt is a certificate issued by a US bank that represents shares in a foreign company. It trades on US markets in US dollars, so a US investor can hold a foreign stock without dealing in the home-market shares directly. Source: SEC.
What are the three levels of ADR?
Level I trades over the counter with light disclosure. Level II is listed on a US exchange and requires the foreign issuer to register and file a 20-F. Level III adds a public capital raise. Higher levels mean more SEC disclosure. Source: SEC.
What is the difference between a sponsored and unsponsored ADR?
A sponsored ADR is set up with the foreign company's involvement under a deposit agreement with one depositary bank. An unsponsored ADR is created by a bank without the company's participation, and several banks may issue competing receipts. Source: SEC.
Where can I see who owns a company's ADRs?
Large US managers holding ADRs disclose them on quarterly 13F filings, and insiders may file Form 4. Both are on SEC EDGAR and free to read. The foreign issuer itself reports on Form 20-F and Form 6-K. Source: SEC EDGAR.
Flock tracks these filings, sourced, dated, and linked back to the original. See what smart-money entities disclosed, without the guesswork about what it means.
Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.