New Sebi framework to boost the issuance of deposit receipts

New Delhi, December 1 () In a movement that can benefit Indian companies, as well as foreign investors, the Sebi regulator has issued a new framework for issuing deposit receipts for greater exposure to world markets for Increase capital and improve your shareholder base.

DRs are instruments denominated in foreign currency, issued by a foreign depositary backed by securities of an issuer, issued or transferred to a national custodian and listed on an international stock exchange. These may appear in international exchanges in the permitted jurisdictions.

Experts believe that issuing DR has the additional benefit of increasing the liquidity of the share while increasing the company's prestige in its local market.

Deposit receipts foster an international base of shareholders and provide an easier opportunity for foreign investors to obtain the benefits of diversification while negotiating in their own market under family liquidation and settlement conditions.

On October 10, the Indian Securities and Exchange Board established a framework for issuing deposit receipts (DR) by publicly traded companies and to be listed companies in order to provide greater access to foreign funds Subsequently, on November 28, a list of permitted jurisdictions and international exchanges has also been prescribed.

These bags are NYSE and Nasdaq in the USA. UU., The Tokyo Stock Exchange in Japan, Korea Exchange Inc in South Korea, the London Stock Exchange in the United Kingdom, Euronext Paris in France, the Frankfurt Stock Exchange in Germany, the Toronto Stock Exchange in Canada, and also India International Exchange and NSE International Exchange at the International Financial Services Center in India.

According to Sebi rules, issuers, their promoters, the group of promoters, directors and selling shareholders who cannot access the capital markets and declared as intentional defaulters or fugitive economic criminals are not eligible to undertake an RD problem. .

The issuance of DR may be offered by new issuance or by transfer by the holders of existing securities, provided that it complies with the foreign investment limits imposed by the FEMA rules.

The Sebi circular also allows the simultaneous quotation of DR and permitted values ​​in the Indian stock exchanges in which the issuance or transfer of the DRs can only occur after the commercial approval of the Indian stock exchange has been received for a public offer

The issuer must comply with all public disclosure rules of the permitted jurisdiction where the DRs will be listed, in addition, these disclosures must also be submitted on an Indian stock exchange. The DR issue price should not be less than the price of the public offer/preferential allocation/QIP that has been made to national investors. In the event that the permitted values ​​are transferred for the issuance of DR, they must be issued at a price not lower than the price of a corresponding mode of issuance of securities allowed to national investors according to applicable laws. BJ MR MR