American Depository Receipt Legal Meaning and Definition

Here is a simplified definition of the legal term American Depository Receipt.

American Depository Receipt (ADR) (noun): An American Depository Receipt, often referred to by its acronym "ADR", is a type of negotiable financial instrument issued by an American bank. It represents a specified number of shares in a foreign company traded on an American stock exchange. ADRs allow U.S. investors to invest in foreign companies without dealing with currency exchange or foreign stock markets. Note that ADRs still carry the same risks as investing in foreign companies directly, such as economic and political instability. It should also be noted that the definition has no relation to the example text provided as it pertains to an entirely different legal term, 'arrest'. Please ensure to cross check the term being asked about.