# Why ADR dividends arrive smaller than the declared amount

The depositary bank converts the dividend and takes its fee before your broker sees it. Where the per-ADS fee is written, and how to price it before buying.

*https://stockmarketstack.com/guides/why-adr-dividends-arrive-smaller · background to Dividend Trackers & Research*

**Answer:** Because an ADR dividend passes through a depositary bank, which converts it into dollars at a rate it sets plus a spread, and deducts its own per-share fees before paying the net amount on. The ceilings are written in the deposit agreement filed on Form F-6 and repeated in the issuer's 20-F: up to five cents per ADS per distribution in one 2026 agreement, one cent in another. Withholding tax comes off separately.

## How it works

An American depositary receipt is a US-traded claim on shares that sit with a custodian abroad. The
company pays its dividend to that custodian in its own currency, and a chain of intermediaries turns
it into a dollar credit in your account.

1. **The issuer** declares a dividend per ordinary share, in its home currency.
2. **Withholding**, if the home country levies it, comes off at source.
3. **The depositary bank** receives the cash, converts it into dollars, deducts its fee per ADS, and
   pays the net amount to the Depository Trust Company.
4. **DTC** allocates it to the banks and brokers that hold the ADSs for their customers.
5. **Your broker** credits you, net.

The SEC's [investor bulletin on ADRs](https://www.sec.gov/files/adr-bulletin.pdf) describes the fee
step plainly. Depositary banks charge holders "custody fees, sometimes referred to as Depositary
Services Fees", and "a common practice for collection of the custody fee is for the ADR depositary
bank to subtract the amount of the fee from the gross dividends". DTC "will announce both the gross
dividend rate and the net dividend rate after deduction of the ADR custody fee".

So the declared dividend, multiplied by the ADS ratio, is a gross figure nobody pays you. What
reaches the account is that figure after tax, after conversion and after the fee. The withholding
step is the subject of
[tracking foreign dividends and the tax withheld from them](https://stockmarketstack.com/how-to/track-foreign-dividends-and-withholding);
this page is about the other two.

## Where the fee is written down

Two documents, both free on EDGAR, and you need only one.

**The deposit agreement**, filed as an exhibit to the issuer's Form F-6 registration statement. The
bulletin points to it: "Investors should review the fees reported in the Form F-6 registration
statement". In Reckitt Benckiser's agreement, below, the schedule is paragraph (7) of the form of ADR
attached to it, headed "Charges of Depositary".

**The annual report on Form 20-F.** [Item 12.D.3](https://www.sec.gov/files/form20-f.pdf) requires the
issuer to "describe all fees and charges that a holder of American Depositary Receipts may have to
pay, either directly or indirectly", including fees for "receiving or distributing dividends" and
"general depositary services, particularly those charged on an annual basis", and the depositary's
right "to collect fees and charges by offsetting them against dividends received". Item 12.D.4 adds
"all fees and other direct and indirect payments made by the depositary to the foreign issuer".
Annual reports put this under Item 12, and it is the faster read.

## Two filings, two schedules

The ceilings vary by agreement. Two filed in 2026 show the range.

**Reckitt Benckiser and JPMorgan.** The
[deposit agreement filed on Form F-6EF on 5 August 2026](https://www.sec.gov/Archives/edgar/data/1420798/000119380526001027/e665688_ex99-a.htm)
lets the depositary charge holders:

- up to 5 cents per ADS for any cash distribution;
- up to 5 cents per ADS for a distribution of securities or their sale proceeds;
- an aggregate fee of up to 5 cents per ADS per calendar year for administering the ADRs, payable at
  the depositary's discretion by billing holders "or by deducting such charge from one or more cash
  dividends";
- up to 5 dollars per 100 ADSs issued or cancelled;
- reimbursement of the custodian's and its own expenses in servicing the shares.

Each ADS represents one-fifth of an ordinary share.

**Infosys and Deutsche Bank Trust Company Americas.** The
[20-F for the year to 31 March 2026](https://www.sec.gov/Archives/edgar/data/1067491/000119312526270520/infy-20260331.htm),
filed on 15 June 2026, lists a fee not over 1 cent per ADS for each cash distribution, an annual fee
not over 2 cents per ADS, and not over 5 cents per ADS to issue or surrender ADSs, plus the
depositary's taxes, transfer fees and "customary expenses incurred by the depositary in the
conversion of foreign currency". Each ADS represents one equity share. The dividend section says
cash dividends are paid to the depositary in rupees and "distributed, net of Depositary fees, taxes,
if any, and expenses".

The same 20-F answers Item 12.D.4. For fiscal 2026 "the Depositary has made payments to Infosys
totaling to approximately $5.04 million (post deduction of withholding tax)", which the company may
use for investor-relations costs of the ADR programme. The fee flow is not only from holder to bank.

## The conversion rate is a second charge

The fee schedule is in cents; the currency conversion is a spread on a rate, and it is easier to miss.
Reckitt Benckiser's agreement lets JPMorgan convert through its own foreign exchange desk, acting "in
a principal capacity" for some currencies, at "a published benchmark rate" or a third-party rate, "in
each case plus or minus a spread". The depositary discloses which rate and spread apply on its own
website, and the agreement states that they may differ from rates the bank gives other customers. If
the company pays the depositary in dollars, no conversion is made.

So two holders of the same company's dividend, one holding the ordinary shares and converting at
their own broker and one holding the ADS, can receive different dollar amounts with no fee line on
either statement explaining the difference.

## What it costs

A per-ADS fee is fixed in cents while the dividend per ADS is not, so the same fee is a different
share of every payment.

Infosys's board recommended a final dividend for fiscal 2026 of 25 rupees per share, which the 20-F
puts at approximately 26 cents. With one share per ADS, the 1-cent ceiling on a cash distribution is
about 3.8% of that payment, before withholding and conversion, and before any annual fee.

Under a 5-cent ceiling the arithmetic is steeper. On a dividend of 50 cents per ADS, 5 cents is 10%;
on 25 cents it is 20%. The ratio decides which: an ADS representing a fraction of a share carries a
fraction of the share's dividend, and the per-ADS fee does not shrink with it.

The bulletin's own example is older and broader: fees "assessed per ADR", so that "1000 ADRs could be
assessed a fee ranging from $20 to $50". When the ADR pays no dividend to deduct from, "DTC charges
the fee to its users (i.e., banks and broker-dealers) who pass them on to their customers", which is
the unexplained debit some holders find on a statement.

## What you can do about it

**Read the fee before you buy.** Open the issuer's latest 20-F through [SEC EDGAR](https://stockmarketstack.com/tools/sec-edgar)
and search for "fees and charges"; Item 12 lists them. If the 20-F is unclear, the deposit agreement
in the F-6 is the binding text. Note three numbers: the fee per cash distribution, the annual fee,
and the ADS ratio.

**Divide the fee by a typical dividend per ADS.** One line of arithmetic tells you whether the
depositary takes 2% or 20% of each payment. A low-yield ADS with a small ratio is the case where the
fee is largest relative to what you receive.

**Look up gross and net when a dividend is announced.** The bulletin notes that DTC typically
announces both. The difference, less any withholding, is the depositary's deduction for that
payment.

**Record what your broker credited, not what was declared.** If your
[dividend tracker](https://stockmarketstack.com/categories/dividend-trackers) fills dividends from declared amounts, it records a
gross figure. [Snowball Analytics](https://stockmarketstack.com/tools/snowball-analytics) and [DivvyDiary](https://stockmarketstack.com/tools/divvy-diary)
can show figures net of a tax rate you set, but a tax-rate setting is not a depositary fee. If the tracker lets you edit a received payment, enter the net
amount from your statement; [tracking dividends across brokers](https://stockmarketstack.com/how-to/track-dividends-across-brokers)
covers collecting it.

**Expect a separate debit on non-paying ADRs.** If an ADR you hold pays no dividend, the annual fee
arrives as its own charge from your broker. Check its amount against the agreement's annual ceiling.

**Know that the fee belongs to the ADR, not the company.** Ordinary shares on the home market are
outside the deposit agreement. They carry their own costs, in currency conversion, market access and
custody, and the comparison between the two routes is yours to make with your broker's numbers.

## Tools this bears on

- [SEC EDGAR](https://stockmarketstack.com/tools/sec-edgar.md) — Every US filing since 1994, free and keyless — the limit is ten requests a second.
- [Snowball Analytics](https://stockmarketstack.com/tools/snowball-analytics.md) — A dividend calendar and forward-income projection wrapped around a portfolio tracker.
- [DivvyDiary](https://stockmarketstack.com/tools/divvy-diary.md) — A personal dividend calendar and forward income figure, built around German brokers.

## FAQ

### Why is my ADR dividend less than the announced dividend?

Three deductions can sit between the two. The home country may withhold tax, the depositary bank converts the foreign-currency dividend at its own rate plus a spread, and the depositary deducts a per-ADS fee set in the deposit agreement. The SEC's investor bulletin notes that DTC typically announces both the gross and the net rate after the custody fee.

### How much is the ADR depositary fee?

Whatever the deposit agreement allows, as a ceiling per ADS. Reckitt Benckiser's agreement with JPMorgan, filed in August 2026, allows up to 5 cents per ADS for each cash distribution and up to 5 cents per ADS a year for administration. Infosys's 20-F for fiscal 2026 lists up to 1 cent per ADS per cash distribution and up to 2 cents a year.

### Where do I find the ADR fees for a specific company?

In the issuer's annual report on Form 20-F, which Item 12.D.3 requires to describe all fees and charges an ADR holder may pay, and in the deposit agreement filed as an exhibit to the Form F-6 registration statement. Both are free on EDGAR.

### Why was I charged an ADR fee when no dividend was paid?

Because the annual depositary fee has to be collected somehow. The SEC's bulletin explains that when an ADR pays no dividend to deduct it from, DTC charges the fee to its participant banks and brokers, who pass it on to their customers, so it appears as a separate debit.

### Is the ADR fee the same as foreign withholding tax?

No. Withholding is a tax set by the issuer's home country and reduced by treaty; the depositary fee is a contractual charge by a US bank under the deposit agreement. They are deducted separately and recorded differently, and a tracker that models one will not show the other.

## Sources

1. [Investor Bulletin: American Depositary Receipts](https://www.sec.gov/files/adr-bulletin.pdf) — U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, read 2026-10-23
2. [Form 20-F, General Instructions, Item 12.D](https://www.sec.gov/files/form20-f.pdf) — U.S. Securities and Exchange Commission, read 2026-10-23
3. [Reckitt Benckiser Group plc, Form F-6EF, Exhibit 99(a), Deposit Agreement with JPMorgan Chase Bank, N.A.](https://www.sec.gov/Archives/edgar/data/1420798/000119380526001027/e665688_ex99-a.htm) — U.S. Securities and Exchange Commission (EDGAR), 2026-08-05
4. [Infosys Limited, Form 20-F for the fiscal year ended March 31, 2026](https://www.sec.gov/Archives/edgar/data/1067491/000119312526270520/infy-20260331.htm) — U.S. Securities and Exchange Commission (EDGAR), 2026-06-15

*Last updated 2026-10-23. A reference page, corrected in place — not a dated post.*