The Hindu Business Line : ADR/GDR rules relaxed for unlisted cos

The Government on Wednesday announced that unlisted Indian companies would now be allowed to sponsor an issue of American depository receipts (ADRs) or global depository receipts (GDRs) with an overseas depository against the shares held by its shareholders.

Under a sponsored ADR/GDR programme, a majority shareholder in a company gets an opportunity to divest a portion of his holding in the overseas market through issuance of ADRs or GDRs. Such a window for divesting abroad is also made available to other shareholders in the company.

The latest decision to throw open the sponsored ADR/GDR route to unlisted Indian companies, however, comes with certain conditions.

Government stipulation

Unlisted companies that have not issued foreign currency convertible bonds (FCCBs), ADRs/GDRs prior to August 31, 2005, would require prior or simultaneous listing in the domestic stock exchanges for any such instruments or sponsoring depository receipts against existing shares.

For unlisted companies that have raised funds through these measures prior to August 31, 2005, and are not making profit, the revised ADR/GDR scheme states that such companies may be allowed to sponsor issues against existing shares held by its shareholders and would be permitted to comply with listing conditions on the domestic stock exchanges within three years of having started to make profit.

The Government has also stipulated that the facility of sponsored ADR/GDR offering by unlisted companies should be available without partiality to all categories of shareholders of the company whose shares are being sold in the ADR/GDR market overseas.

Moreover, the sponsored ADR/GDR offering of unlisted companies should conform to the foreign direct investment policy of the Government and the Foreign Exchange Management Act regulations of the Reserve Bank of India.

Guideline revisions

In March this year, the Government had eased the domestic listing rule for unlisted companies that had raised money through FCCBs/GDRs/ADRs and were not still making profit. Such entities were permitted to comply with the listing conditions on the domestic stock exchanges within three years of having started making profits.

The Finance Ministry had in August 2005 undertaken a major revision to the guidelines on ADRs/GDRs and made it mandatory for unlisted companies that had raised funds from overseas offerings to list on the domestic stock exchanges within a stipulated time.

It had then said that such listing would have to be done within three years of the issuance of GDRs/FCCBs or on making profit in any financial year starting from 2005-06, whichever is earlier. The Ministry also stipulated that unlisted companies that had not yet accessed the GDR/FCCB route would require a prior or simultaneous listing in the domestic market along with the overseas offering.

More Stories on : Financial Policy | Overseas Borrowings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Suzlon gets shareholder nod to raise Rs 5,000 cr

Ratan Tata meets Maran

Qualcomm to help set up CDMA handset unit

Plaints filed against H-1B specific ads

Close-ended equity funds may give rise to new wave of NFOs

India Infoline: Up on value pick

GE Shipping sails on `demerger nod'

Pfizer Q2 net soars 132 pc on plant sale

ADR/GDR rules relaxed for unlisted cos

Edgy Sensex ends marginally weak

Derivative transactions: RBI says banks must make full disclosure

Tata Coffee mulls SPV to fund Eight O'Clock buy

Beware of malicious attacks via hoax SMS

Centre notifies ban on pulses export

Pocket