OperatingMechanism
TheoperatingmechanismofADRfinancingtoolsisthedynamicprocessoftheoperatingsystemcomposedofallparties
.
Party3inADRfinancinghasafoundationinmycountry
Stockissuingcompanies,custodianbanksandAmericandepositorybanks
Banks,investors,etc.3TheyplaydifferentrolesintheoperationofADR.3Playtheirrespectiveroles.
Amongthemanyoverseasfinancingmethodsinmycountry,3ADRcan
whetheritwillbegeneratedandbecomeanewoverseasfinancingtooldependsonthewillingnessofChinesecompaniestoraisefundsoverseas.
.
First,ifacompanywantstouseADRtogototheU.S.
orothercountries’securitiesmarketstoraiseforeigncapitaltosolve
thecompanyhasinsufficientfundsforexpansion3,thenthecompanyThatis,thebasic
stockissuingcompanymustselectafinancialinstitutionregisteredinthecountrywheretheADRisissuedandlisted
asadepository
bank.Depositorybanksshouldgenerallybelarge-scalefinancialinstitutionsthatoperatetransnationalbusinesses,
haveaconsiderablescale,andhaveextensiveoverseasbranches
.
Secondly,3basicstocksafterthedepositarybankisselected
TheissuingcompanyandthedepositarybankformulateanADRissuanceplan
andplantheissuancestrategy3andThedepositorybankprovidesagencyandconsultingservicesinlaw,accounting,auditing,etc.
Thethirddepositarybankisinthecountrywheretheunderlyingstockisissued.
mycountryarrangesafinancialinstitutionasthecustodianbank.Guarantee
Themanagementbankisusuallythelocalbranchofthedepositarybank
Organizationoragency3ThedepositorybankactsasanagentforthedepositoryofADR
Stock3isalsoresponsibleforreceivingdividends
ordividends,andprovidingmarketinformationoftheissuingcompany
.
Fourth,whentheADRissuancepreparationsarecompletedandthedepositismade
Thedepositorybankpurchasestheunderlyingstockandisreleasedintothecustodianaccount
3ThedepositorybankwillAnADRrepresentingtheunderlyingstockisissued
toinvestorsintheUnitedStatesorothercountries.
Fifth,aftertheADRisissued,itcanbetradedintheU.S.stockmarketlikeotherU.S.securities.
ItcanbelistedandtradedontheNewYorkStockExchange,theU.S.StockExchange
TheStockExchange,ADR,andthemajorsecuritiestradingsystem(
Itcanalsobetradedontheover-the-countermarket(Butmore
ADRsaretransferredbetweenADRinvestorsintheover-the-countermarket
.
Ofcourse,theADRmarketisshrinking,Decreaseddemand
Underthemarketenvironment(investorsselltothedepositorybank
ADR(Atthistime,thedepositorybankinformsthedepositorybanktobeinChina
TheunderlyingstockrepresentedbytheinvestorwhosoldtheADR
Tickets(thedepositarybankwillpaythesaleoftheunderlyingstock
totheADRinvestor(recovertheADRintime.Thisshouldbedone
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TheADRissuedbythemunicipalenterpriseiscancelledontheU.S.stockmarket.