ADR stands for American Depositary Receipt and GDR stands for Global Depositary Receipt. ADRs are generally listed on American stock exchanges and GDRs are listed on European stock exchanges. It is only through ADRs and GDRs the shares of a foreign company, which is listed in its own country, can be traded in US and European countries respectively. The Indian equivalent of the Depositary Receipts is IDR (Indian Depositary Receipt). If a foreign company wants to list in Indian stock exchanges like NSE or BSE, it has to issue IDRs. The value of an IDR can be multiples or sub-multiples of the value of the share in its original country. The IDR will be in rupees converted from the equivalent currency of the country, where the stock is originally listed. Standard Chartered plc was the first foreign company to issue IDRs in India.
In order to issue IDRs, the foreign company should meet some additional requirements in addition to the requirements needed by a domestic company intending to make an IPO in India. ADRs, GDRs, IDRs, etc. are used by foreign companies to raise capital in the world market. With these instruments, domestic investors can hold the shares of global markets.
Since these are like common stocks, it will have the same effect as common stocks. The stake holders of these instruments can receive dividends and can have voting rights also.