What is Unsponsored ADR?

Unsponsored ADR :
These ADRs are issued by one or more depository banks based on market demand
without any formal agreement with the issuing company, Such issues cannot be controlled
and the price discovery mechanism lacks transparency due to which, they are discouraged
by regulatory authorities. Unsponsored ADR’s are issued without the cooperation of the
foreign company but it has to be a reporting company as per the US Exchange Act of
1934. Un-sponsored ADRs cannot co-exist with a sponsored program since it may result in
arbitrage situations.