Stocks

SEBI unveils norms for listing of DRs on GIFT exchange

Our Bureau Mumbai | Updated on October 10, 2019 Published on October 10, 2019

GIFT city   -  Paul Noronha

SEBI on Thursday issued a detailed framework for issuance of depository receipts (DRs) through GIFT City exchanges in Gujarat.

Depository receipts of listed companies on the NSE and the BSE, can now be listed on exchanges in GIFT and traded there. Only foreign institutional investors and entities are allowed to trade on GIFT exchange while domestic retail players are barred.

DR is originally a physical certificate of an underlying equity and allows investors to hold them and be traded on an exchange platform. Since direct equities of Indian companies are not allowed to be listed on GIFT platform, which is an offshore exchange, DRs would let Indian companies be traded and held like equity shares on GIFT. SEBI said all listed companies in India where the promoters are not defaulters, economic offenders or barred form market can issue DRs to be traded on the GIFT platform. SEBI has also allowed companies to simultaneously list on the NSE and the BSE in Mumbai and offer DRs on Gift platform.

SEBI has said that companies should ensure that shareholding limits, norms on minimum public shareholding and those with regard to foreign exchange management act are followed in issuance of DRs. Domestic custodian have to maintain records in respect of, and report to, Indian depositories all transactions in the nature of issue and cancellation of depository receipts. SEBI said foreign depository shall not issue or pre-release the DRs unless the domestic custodian has confirmed the receipt of underlying permissible securities.

Published on October 10, 2019
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