The answer to whether ADRs will necessarily increase the equity of public companies is no. Issuing an ADR does not always directly increase a company's share capital. Typically, the issuance of an ADR is simply an operation of converting existing shares into depositary receipts and does not involve the issuance of new shares. The specific situation depends on how the ADR is issued:
1. Newly issued shares: If the company issues new shares through the issuance of ADR (Primary ADR offering), this will increase the company's share capital.
2. Conversion of existing stocks into ADR: If the ADR is based on the conversion of existing stocks (Secondary ADR offer), it will not increase the company's share capital.
Therefore, whether or not to increase the share capital depends on how the ADR is issued. If the ADR is created by issuing new shares, it will increase the share capital; Not if it's converting existing shares into ADRs.
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1. Newly issued shares: If the company issues new shares through the issuance of ADR (Primary ADR offering), this will increase the company's share capital.
2. Conversion of existing stocks into ADR: If the ADR is based on the conversion of existing stocks (Secondary ADR offer), it will not increase the company's share capital.
Therefore, whether or not to increase the share capital depends on how the ADR is issued. If the ADR is created by issuing new shares, it will increase the share capital; Not if it's converting existing shares into ADRs.