Rule 13: Issue of Indian Depository Receipts (IDRs)

Rule 13: Issue of Indian Depository Receipts (IDRs) · Complied AI

(3)

The issuing company shall follow the following procedure for making an issue of

IDRs:

(a)

the issuing company shall, where required, obtain the necessary approvals or exemptions from the appropriate authorities from the country of its incorporation under the relevant laws relating to issue of capital and IDRs.

(b)

issuing company shall obtain prior written approval from the Securities and Exchange Board of India on an application made in this behalf for issue of IDRs along with the issue size.

(c)

an application under clause (b) shall be made to the Securities and Exchange Board of India (along with draft prospectus) at least ninety days prior to the opening date of the IDRs issue, in such form , along with such fee and furnishing such information as may be specified by the Securities and Exchange Board of India from time to time:

Proviso

Provided that the issuing company shall also file with the Securities and Exchange Board of India, through a Merchant Banker, a due diligence report along with the application under clause (b) in the form specified by the Securities and Exchange Board of India.

(d)

the Securities and Exchange Board of India may, within a period of thirty days of receipt of an application under clause (c), call for such further information, and explanations, as it may deem necessary, for disposal of such application and shall

dispose the application within a period of thirty days of receipt of further information or explanation:

Proviso

Provided that if within a period of sixty days from the date of submission of application or draft prospectus, the Securities and Exchange Board of India specifies any changes to be made in the draft prospectus, the prospectus shall not be filed with the Securities and Exchange Board of India or Registrar of Companies unless such changes have been incorporated therein.

(e)

the issuing company shall on approval being granted by the Securities and Exchange Board of India to an application under clause (b), pay to the Securities and Exchange Board of India an issue fee as may be prescribed from time to time by the Securities and Exchange Board of India.

(f)

the issuing company shall file a prospectus, certified by two authorized signatories of the issuing company, one of whom shall be a whole-time director and other the Chief Financial Officer, stating the particulars of the resolution of the Board by which it was approved with the Securities and Exchange Board of India and Registrar of Companies, New Delhi before such issue:

Proviso

Provided that at the time of filing of said prospectus with the Registrar of Companies, New Delhi, a copy of approval granted by the Securities and Exchange Board of India and the statement of fees paid by the Issuing Company to the Securities and Exchange Board of India shall also be attached.

(g)

the prospectus to be filed with the Securities and Exchange Board of India and the Registrar of Companies, New Delhi shall contain the particulars as prescribed in subrule (8) and shall be signed by all the whole-time directors of the issuing company,

and the Chief Financial Officer.

(h)

the issuing company shall appoint an overseas custodian bank, a Domestic Depository and a Merchant Banker for the purpose of issue of IDRs.

(i)

the issuing company may appoint underwriters registered with the Securities and

Exchange Board of India to underwrite the issue of IDRs.

(j)

the issuing company shall deliver the underlying equity shares or cause them to be delivered to an Overseas Custodian Bank and the said bank shall authorize the

domestic depository to issue IDRs.

(k)

the issuing company shall obtain in-principle listing permission from one or more stock exchanges having nationwide trading terminals in India.

Explanation

For the purposes of this rule,-

(i)

“Domestic Depository” means custodian of securities registered with the Securitiesand Exchange Board of India and authorized by the issuing company to issue IDRs.

(ii)

“Merchant Banker” means a Merchant Banker as defined in sub-regulation (cb) of regulation 2 of the Securities and Exchange Board (Merchant Bankers) Regulations, 1992.

(iii)

“Overseas Custodian Bank” means a banking company which is established in a country outside India and which acts as custodian for the equity shares of Issuing Company, against which IDRs are proposed to be issued by having a custodial arrangement or agreement with the Domestic Depository or by establishing a place of business in India.

(8)

The prospectus or letter of offer shall, inter alia, contain the following particulars,

namely:-

(a)

General information-

(i)

Name and address of the registered office of the company;

(ii)

name and address of the Domestic Depository, the Overseas Custodian Bank with the address of its office in India, the Merchant Banker, the underwriter to the issue and any other intermediary which may be appointed in connection with the issue of IDRs;

(iii)

names and addresses of Stock Exchanges where applications are made or proposed to be made for listing of the IDRs;

(iv)

the provisions relating to punishment for fictitious applications;

(v)

statement or declaration for refund of excess subscription;

(vi)

declaration about issue of allotment letters or certificates or IDRs within the stipulated period;

(vii)

date of opening of issue;

(viii)

date of closing of issue;

(ix)

date of earliest closing of the issue;

(x)

declaration by the Merchant Banker with regard to adequacy of resources of underwriters to discharge their respective obligations, in case of being required to do so;

(xi)

a statement by the Issuing company that all moneys received out of issue of IDRs shall be transferred to a separate domestic bank account, name and address of the bank and the nature and number of the account to which the amount shall be credited;

(xii)

the details of proposed utilisation of the proceeds of the IDR issue.

(b)

Capital Structure of the Company- The authorized, issued, subscribed and paidup capital of the issuing company;

(c)

Terms of the issue-

(i)

rights of the IDR holders against the underlying securities;

(ii)

details of availability of prospectus and forms, i.e., date, time, place etc;

(iii)

amount and mode of payment seeking issue of IDRs; and

(iv)

any special tax benefits for the Issuing company and holders of IDRs in India.

(d)

Particulars of Issue-

(i)

the objects of the issue;

(ii)

the cost of the Project, if any; and

(iii)

the means of financing the projects, if any including contribution by promoters.

(e)

Company, Management and Project-

(i)

the main objects, history and present business of the company;

(ii)

the Promoters or parent group or owner group and their background:

Proviso

Provided that in case there are no identifiable promoters, the names, addresses and other particulars as may be specified by the Securities and Exchange Board of India of all the persons who hold five percent. or more equity share capital of the company shall be disclosed;

(iii)

the subsidiaries of the company, if any;

(iv)

the particulars of the Management or Board (i.e. Name and complete address(es) of Directors, Manager, Managing Ddirector or other principal officers of the company);

(v)

the location of the project, if any;

(vi)

the details of plant and machinery, infrastructure facilities, technology etc., where applicable;

(vii)

the schedule of implementation of project and progress made so far, if applicable;

(viii)

nature of product(s), consumer(s), industrial users;

(ix)

the particulars of legal, financial and other defaults, if any;

(x)

the risk factors to the issue as perceived; and

(xi)

consent of the Merchant Bankers, Overseas Custodian Bank, the Domestic Depository and all other intermediaries associated with the issue of IDRs.

(xii)

the information, as may be specified by the Securities and Exchange Board of India, in respect of listing, trading record or history of the Issuing company on all the stock exchanges, whether situated in its parent country or elsewhere.

(f)

Report-

(i)

Where the law of a country, in which the Issuing company is incorporated, requires annual statutory audit of the accounts of the Issuing company, a report by the statutory auditor of the Issuing company, in such form as may be specified by the Securities and Exchange Board of India on –

(A)

the audited financial statements of the Issuing company in respect of three financial years immediately preceding the date of prospectus;

(B)

the interim audited financial statements in respect of the period ending on a date which is less than 180 days prior to the date of opening of the issue, if the gap between the ending date of the latest audited financial statements disclosed under clause (A) and the date of the opening of the issue is more than 180 days:

Proviso

Provided that if the gap between such date of latest audited financial statements and the date of opening of issue is 180 days or less, the requirement under item

(B)

shall be deemed to be complied with, if a statement, as may be specified by the Securities and Exchange Board of India, in respect of material changes in the financial position of Issuing company for such gap is disclosed in the Prospectus:

Proviso

Provided further that in case of an Issuing company which is a foreign bank incorporated outside India and which is regulated by a member of the Bank for International Settlements or a member of the International Organization of Securities Commissions which is a signatory to a Multilateral Memorandum of Understanding, the requirement under this paragraph, in respect of period beginning with last date of period for which the latest audited financial statements are made and the date of opening of the issue shall be satisfied, if the relevant financial statements are based on limited review report of such statutory auditor;

(ii)

Where the law of the country, in which the Issuing company is incorporated, does not require annual statutory audit of the accounts of the Issuing company, a report, in such form as may be specified by the Securities And Exchange Board of India, certified by a Chartered Accountant in practice within the terms and meaning of the Chartered Accountants Act, 1949 on –

(g)

Other Information-

(i)

the Minimum subscription for the issue;

(ii)

the fees and expenses payable to the intermediaries involved in the issue of IDRs;

(iii)

the declaration with regard to compliance with the Foreign Exchange Management Act, 1999.

(h)

Inspection of Documents-

The Place at which inspection of the offer documents, the financial statements and auditor’s report thereof shall be allowed during the normal business hours; and

(i)

any other information as specified by the Securities and Exchange Board of India or the Income-tax Authorities or the Reserve Bank of India or other regulatory authorities from time to time.

“ whole-time director ” includes a director in the whole-time employment of the company