The M.S. Sahoo Panel that was set up to undertake a comprehensive review of the global depository receipts (GDR) scheme submitted its report on Wednesday.
The report was submitted to Economic Affairs Secretary Arvind Mayaram by Sahoo, who headed a six-member committee, at North Block on late Wednesday evening.
This committee was tasked to review the GDR scheme framed by the central Government in 1993.
Sahoo is a former SEBI whole-time member and is Secretary at the Institute of Company Secretaries of India now.
Several suggestions including steps to plug loopholes in the GDRs/FCCBs (foreign currency convertible bonds) have been made by the panel, it is learnt.
The committee is understood to have reviewed the GDR scheme of 1993 in the light of legislative changes in the financial sector and macroeconomic developments besides the enactment of a new company law.
Several safeguards have been recommended in the wake of changes in foreign direct investment policy and enactment of prevention of money laundering legislation
Companies are allowed to issue GDRs and FCCBs under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through the Depository Receipt Mechanism) Scheme, 1993.
GDRs are receipts denominated in foreign currency created by a depository in the country of listing. They are created against the underlying equity shares of the Indian company in a predetermined ratio.
GDRs are issued to foreign investors in their currency through a public offering and are listed on a designated exchange. Shares against which the GDRs are issued are kept aside separately.
FCCBs are bonds issued by Indian companies in a foreign currency at a stated interest rate (coupon rate).
Bond holders have the option of converting them into equity at a pre-agreed price.