Depository Bank Law and Legal Definition

Depository bank is a bank holding American Depositary Shares (ADSs), or shares of corporations based outside the U S, and sells American Depositary Receipts (ADRs) to US investors. The bank provides all the stock transfer and agency services in connection with a depository receipt program.

Depository bank functions by:

  • arranging for a custodian to accept deposits of ordinary shares;
  • issuing the negotiable receipts which back up the shares;
  • maintaining the register of holders to reflect all transfers; and
  • exchanging, and distributing dividends.