# Global Depository Receipts (GDRs)
## What is a GDR?
A Global Depository Receipt (GDR) is a certificate issued by a depository bank abroad that holds shares of an Indian company. The GDR trades on a foreign exchange in foreign currency, while the underlying shares stay with the Indian custodian.
## Definition — Section 2(44)
A GDR is a depository receipt created by a foreign depository outside India, authorised by a company to issue such receipts.
## Issuance — Section 41
A company may issue GDRs in foreign countries after passing a Special Resolution in its general meeting and subject to prescribed conditions.
## Manner and Form of Issue
1. Mode of issue: Public offering, private placement, or any other manner permitted in that jurisdiction.
2. Listing: Can be listed/traded on platforms in the foreign jurisdiction.
3. Underlying shares: May be against fresh shares or existing shares of current shareholders, subject to RBI/CG conditions.
4. Allotment Route: Underlying shares are allotted in the name of the Overseas Depository Bank (ODB); the ODB issues GDRs to investors.
## Voting Rights
- A GDR holder is NOT a member of the company.
- To get membership and voting rights, the holder must convert the GDR into underlying shares.
- Until conversion, the Overseas Depository Bank votes on behalf of GDR holders, as per the deposit agreement.
## Why Companies Issue GDRs
- Access to foreign capital markets.
- Foreign investors who cannot easily hold Indian shares directly can hold GDRs in their local market.
- Builds international visibility.
## Mind Map
```
Indian Company → Allots shares → Domestic Custodian Bank → Overseas Depository Bank
↓
Issues GDRs to
Foreign Investors
```