Financial Daily from THE HINDU group of publications
Thursday, Sep 15, 2005
Financial Daily from THE HINDU group of publications Thursday, Sep 15, 2005 |
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Corporate
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Overseas Borrowings Government - Policy GDR, FCCB norms in place — Relief for companies that took `effective steps' before Aug 31 Our Bureau
New Delhi , Sept 14 UNLISTED companies that took verifiable "effective steps" before August 31 to raise funds overseas through the global depository receipts (GDRs) or Foreign Currency Convertible Bonds (FCCB) route have been spared the requirement of prior or simultaneous listing in the domestic market. Similarly, listed companies that took verifiable "effective steps" before August 31 for issuing GDRs/FCCBs have been exempted from the revised pricing guidelines issued on August 31. However, these companies must complete their issuance latest by December 31, 2005, the Finance Ministry said here today. The Finance Ministry has now clarified the "effective steps" necessary for claiming such a relief. These are (a) that the company has completed due diligence and filed offering circular in the overseas exchange; or (b) that approval of overseas exchange has been obtained; or (c) that the payment of listing fees is made; or (d) that the approval of the Reserve Bank of India, where applicable, for meeting issue-related expenses has been obtained. The Finance Ministry also clarified that private placement of issues, where no offering circular was placed before the overseas exchange, would not qualify among the "effective steps". Further, it said that all other conditions contained in the August 31 amendment, including (i) eligibility of issuer and (ii) eligibility of subscriber, would remain applicable to all companies including those that took "effective steps" before August 31. The Finance Ministry's latest move follows requests from the industry. On August 31, the Finance Ministry revised the existing GDR/FCCB guidelines, making it mandatory for unlisted companies that have raised funds from overseas markets through the GDR/FCCB route to list on the domestic stock exchanges within a stipulated time frame. The revised guidelines said the listing should be completed within three years of the GDRs/FCCBs issue or on earning profit in any financial year beginning 2005-06, whichever is earlier. For unlisted companies that had not yet accessed the GDR/FCCB route to raise funds overseas, the Finance Ministry said on August 31 they would require prior or simultaneous listing in the domestic market for FCCBs/GDRs issue.
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