for investors seeking exposure to foreign companies without the complexity of buying shares on international exchanges american depositary shares ads are a convenient solution these securities issued by u s banks and representing a specific number of shares in a foreign company trade on american stock exchanges like any domestic stock 
the acronym ads is often used interchangeably with the one for american depositary receipts adrs adrs refer to the physical certificates issued by the depositary bank while adss represent the individual shares of the foreign company held by the depositary bank 12understanding american depositary sharesan adr is a negotiable certificate issued by a u s bank under an agreement with a foreign company it s evidence of ownership of adss the same way a stock certificate means owning equity shares 2adss are meant to facilitate share trading depending on how much the foreign company is willing to follow u s regulations they can trade over the counter otc or on a major exchange such as the new york stock exchange or the nasdaq listing on a major exchange generally requires reporting at the same level as domestic companies and adherence to generally accepted accounting principles gaap 