Who typically holds the shares for ADRs?

• A. The issuing foreign company's board
• B. A custodian, typically a bank in the issuer's country
• C. The U.S. investor
• D. The SEC

Answer: (B)

During an ADR program, the actual foreign shares are held by a custodian bank in the issuer’s country. A depository bank in the United States issues ADRs that represent those deposited shares, so the underlying securities stay with the foreign custodian while US investors trade the ADRs. The investor owns the ADRs, not the actual shares, and the SEC isn’t holding the shares, nor is the issuer’s board directly holding them for the ADR. That custodial arrangement is why the correct description is that a custodian bank in the issuer’s country holds the shares.