South African Depository Receipts (SADRs) are receipts that represent Shares of a particular company but which are not the actual Shares of that company. Issuers of SADRs appoint a depository bank that holds the Shares of that company in a trust. SADRs are handled and traded in the same way as Shares and offer the same economic, corporate and voting rights as investors would enjoy by holding the company's Shares directly. One SADR could represent one company Share, a number of company Shares or even a fraction of a company's Shares. This, means that its price may be different to that of the company Share it represents, but should still reflect the price.
This product is a good option for investors who want to diversify their portfolios globally and gain exposure to foreign equity markets via the JSE. For issuers, depository receipts have become a globally accepted, flexible instrument that enables them to reach investors located outside their home markets while reducing the risk associated with cross-border investments, including foreign legislation, transaction costs and delays, currency fluctuations and complicated settlement transaction processes.
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