Q. Consider the following statements regarding the Indian Depository Receipts?
An IDR declares ownership of shares of a Foreign Company
The Shares in an IDR are held by an Indian Custodian
Using IDR, the Indian Residents get a chance to invest in a listed Foreign entity
Which among the above statements is / are correct?
Answer: Only 1 & 3
Notes: Indian Depository Receipt is receipt, evidencing an underlying foreign security, issued in India by a foreign company which has entered into an agreement with the issuer and depository, custodian and depository or underwriters and depository, in accordance with the terms of prospectus or letter of offer, as may be prescribed. Second statement is not correct because custodian is foreign.
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