Question

Global depository receipts are a form of

• A. Debenture
• B. Bonds
• C. Equity shares
• D. None of these

Hint:

A GDR is issued against shares held by a depository bank, so think ownership, not debt.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
We need to identify what a Global Depository Receipt (GDR) actually represents for the investor holding it.

Step 2: Key Approach:
A GDR is a certificate issued by a bank that represents ownership of shares in a foreign company, so we check which option matches that ownership nature rather than a loan nature.

Step 3: Detailed Explanation:
When an Indian company wants to raise money from foreign investors, it deposits a block of its own equity shares with an overseas depository bank, and the bank then issues GDRs against those shares. Each GDR represents a fixed number of the company's actual equity shares.
A debenture (option 1) and bonds (option 2) are both debt instruments, they represent a loan to the company that must be repaid with interest, and holding one does not give the holder any ownership in the company, so these do not match what a GDR represents.
Since a GDR stands for real equity shares held on the investor's behalf, option (3) is correct.
Because option (3) fits, option (4), none of these, is wrong.

Step 4: Final Answer:
Global depository receipts are a form of equity shares.