Depositary Receipts in 2025: Opportunities for Australian Investors

In a world where markets never sleep, Australian investors are increasingly looking beyond the ASX for growth and diversification. One vehicle making global investing more accessible in 2025 is the depositary receipt (DR). Whether it’s chasing tech growth in the US, tapping into Asian green energy, or owning a slice of European luxury, DRs are reshaping how Australians access international shares—without the traditional headaches of currency conversion, foreign brokers, or complex tax rules.

What Exactly Are Depositary Receipts?

A depositary receipt is a negotiable financial instrument issued by a bank to represent shares in a foreign company, enabling investors to trade overseas stocks in their local market currency and exchange. The most common types include American Depositary Receipts (ADRs) on US exchanges and Global Depositary Receipts (GDRs) listed in Europe and Asia. In Australia, DRs are emerging as a bridge for investors keen to diversify beyond domestic borders.

• Accessibility: DRs allow Australians to buy and sell shares of foreign companies on familiar local platforms, such as the ASX or through Australian brokers.

• Simplified tax reporting: Since DRs are treated as local securities for many purposes, investors often avoid the paperwork headaches linked to direct overseas stock ownership.

• Liquidity and transparency: DRs are traded like regular shares, with prices and dividends converted into AUD, providing greater clarity for portfolio management.

2025 Trends: Regulatory Shifts and Market Growth

This year, the global DR landscape is shifting—driven by both regulatory reforms and investor demand. In March 2025, ASIC updated its guidance on foreign securities, streamlining the process for listing DRs on the ASX and making due diligence more rigorous for Australian brokers. The focus: investor protection and transparency, especially for emerging-market DRs that have historically posed higher risks.

• Faster onboarding: ASX has reduced approval times for new DR programs, particularly for tech and ESG-linked foreign companies.

• Enhanced disclosures: New rules require issuers to provide quarterly updates in English, reducing information asymmetry for Australian investors.

• Tax efficiency: The ATO’s 2025 tax guidance clarifies that most DR dividends will be franked or subject to standard withholding rates, making after-tax returns more predictable.

One standout example: In early 2025, several major Indian and Southeast Asian tech companies launched DRs directly on the ASX, letting Australians participate in booming digital economies without setting up offshore accounts.

Real-World Use Cases: Who Benefits from DRs?

Depositary receipts aren’t just for sophisticated investors or institutional funds. Everyday Australians are using DRs to:

• Diversify beyond the ASX 200: With local banks and miners dominating the index, DRs offer access to global giants like Apple, Alibaba, or Nestlé—right from an Australian brokerage account.

• Tap into growth markets: As the global economy pivots to green energy and digital innovation, DRs make it easier to invest in sectors underrepresented in Australia.

• Reduce currency and regulatory friction: Since DRs are traded in AUD and governed by local investor protections, they’re more user-friendly than direct foreign shares.

Consider the case of a Sydney-based retiree who wanted exposure to the US healthcare sector. Instead of navigating Wall Street’s complexities, she bought ADRs of Johnson & Johnson through her regular ASX-linked platform, receiving dividends in Australian dollars and consolidated tax statements.

Risks and What to Watch in 2025

No investment is without risks, and DRs are no exception. Investors should be mindful of:

• Underlying market risk: The value of a DR still depends on the performance of the foreign company and its home market.

• Exchange rate exposure: While trades settle in AUD, underlying profits and dividends can be impacted by currency movements.

• Liquidity: Not all DRs are equally traded. Some, especially from emerging markets, may have lower daily volumes and wider spreads.

Looking ahead, ASIC’s ongoing review of cross-border investment vehicles could bring further changes to DR regulation, but the momentum in 2025 is firmly toward making global investing more mainstream for Australians.

Conclusion

Depositary receipts are breaking down old barriers, offering Australian investors a practical and efficient way to diversify globally. As regulatory and tax frameworks evolve, DRs are likely to play an even bigger role in portfolios seeking growth and resilience in a volatile world. Whether you’re a seasoned investor or just starting out, now’s the time to consider how DRs could expand your investment universe.