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The Centre has accepted the Sahoo panel report that reviewed the depository receipts scheme framed in the year 1993.
The key recommendations of the committee include allowing issuance of depository receipts against any underlying securities-equity or debt, by any issuer-listed or unlisted.
The Sahoo Panel has recommended that depository receipts can be issued both for capital raising through new shares or against existing/secondary shares and the issuance may be either sponsored or unsponsored.
It is also proposed that depository receipts will count as public shareholding if they have attached voting rights for holders.
The Finance Ministry had in September 2013 set up a Committee under the chairmanship of M.S. Sahoo, Secretary, Institute of Company Secretaries of India, to undertake a comprehensive review of the foreign currency convertible bonds and depository receipt mechanism scheme.
This committee has submitted its report and has recommended a Draft of the new Scheme which is to be notified at an appropriate stage after the enabling amendments have been completed, a finance ministry release issued on Tuesday said.
The draft scheme covers depository receipts only and FCCBs have been left out of its ambit (they would continue to be governed by the existing scheme until further notification), the release added.
Depository receipts are receipts denominated in foreign currency created by a depository in the country of listing. There are two popular types of DRs — global depository receipts and American depository receipts.
DRs are created against the underlying equity shares of the Indian company in a predetermined ratio.
Depository receipts were the first option for Indian policymakers when they decided to throw open the economy to foreign investors in early nineties. Beginning of life with foreign investments started with DRs, it was pointed out.
SAHOO PANEL 2.0
In the second phase, the nine-member panel headed by Sahoo, a former whole-time member of SEBI has been asked to review the framework on external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs).
It was to have submitted its report by March-end, but is yet to do so, sources said.
Srivats.kr@thehindu.co.in
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