MAINLAND companies considering issuing American Depository Receipts (ADRs) have put their plans on hold, according to underwriters in Hongkong. An ADR, a negotiable certificate usually representing a company's publicly traded equity or debt, is often used as an alternative investment vehicle in markets restricted to overseas investors. It is understood Shanghai-listed Chlor Alkali and Shanghai Erfangji Company are reconsidering plans for ADR issues because of expectations that restrictions on US institutional investors in China will be relaxed. At present, the US Securities and Exchange Commission (SEC) does not allow American institutions to directly invest in high-risk markets which do not have clearly unified settlement systems. However, Chinese authorities hope Shanghai's settlement system will be unified next month, which brokers believe would pave the way for US institutional investors on the mainland. ''It's only a question of time; it's just a mechanical process,'' said Smith New Court's director, Mr Norman Li. Brokers expect US authorities to write to China's stock markets within the next six to eight weeks. Some brokers believe ADRs will boost interest in the mainland's fledgling stock markets, while others say ADRs will be difficult to market once US institutions are allowed to invest directly in B shares. ''If the SEC allows US institutional investors to buy Shenzhen and Shanghai B shares, there is no reason to invest in ADRs,'' said Mr Li. ''The whole purpose for ADRs is to circumvent US restrictions. Ultimately, ADRs will be a direct mirror image of a stock's performance.'' But Mr Gary Peck, vice-president of the Bank of New York in Hongkong, said ADRs were a better investment alternative, especially in China, where overseas listings were creating political difficulties. ''There is strong interest from many Chinese B-share companies,'' he said. ''Institutional investors find it easier and more cost-efficient because the infrastructure is already in place. When an investor comes here, he would not have to set up custodial accounts and this will save time.'' Mr Peck and Bank of New York's executive vice-president, Mr Joseph Velli, were last week visiting Beijing, Shanghai and Shenzhen with the message that ADRs offer attractive benefits to both US investors and the overseas companies behind the stocks.