The depositary converts dividends into the host market currency and pays the amounts (net of its own fees) to the DR holders. One DR will represent a number of underlying shares (or a fraction of a single share), according to the DR ratio. The depositary acts as a bridge between the DR holders and the issuer.ĭRs are issued to investors in the target market (the host market) where they are traded, cleared and settled in host market currency in accordance with host market procedures. DRs are purchased by investors (DR holders) in accordance with the terms of the deposit agreement. Meanwhile, cumulative preference shares carry forward the right to profits to following years, if there are insufficient profits to pay the holders in any oneĭepositary receipts (DRs) are securities issued by a depositary representing underlying shares of a corporation which have been placed with the depositary or its nominated custodian. Shareholders may receive additional dividends if the profits are sufficient. Preferred shareholders also have a claim on corporate assets, in the event of liquidation, which ranks ahead of ordinary shareholders, but behind that of the company's creditors. Preferred shareholders have no voting rights and receive fixed dividends (i.e. Preferred shareholders are entitled to a preferential distribution out of profits prior to any distribution to the ordinary shareholders. However, the payment of dividends is not mandatory even if a company records a profit in the year. holders of ordinary shares), being owners of the company, have voting rights and receive dividends at the discretion of Ordinary shares and preferred shares are equity shares issued by the company to shareholders. Most of the equity securities listed on the Exchange are ordinary shares that account for most of the turnover of the Exchange.
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