ISSUANCE OF DEPOSITORY RECEIPTS

1. ADR
GDR
IDR
ISSUANCE OF DEPOSITORY RECEIPTS

2. A Depositary Receipt / DR is a negotiable financial instrument issued by a bank to
represent a foreign company's publicly traded securities.
DRs are generally issued when a foreign company desires:
to list its already publicly traded shares or debt securities on a foreign stock exchange.
to increase its global trade not only in terms of volumes on local and foreign markets but also
results in exchange of information, technology as well as market transparency.
DEPOSITORY RECEIPTS- An OverviewDEPOSITORY RECEIPTS- An Overview

3. INTERNATIONAL EQUITY MARKET
American Depository
Receipts (ADRs)
Global Depository
Receipts (GDRs)
INDIAN COMPANIES- TAPPING FOREIGN RESOURCES
Fund Raising from
US Financial
Markets.
Fund Raising from
International Financial
Markets other than US

4. GLOBAL DEPOSITORY RECEIPTS
Depository Receipt
or Certificates
Overseas Depository
bank outside India
Non- Resident
investors
Issuing Indian
company
GDRs means any
instrument
In the form of
Created by Issued to
Against issue of
ordinary shares/
securities

5.  The term GDR is used throughout the globe and designates any foreign
entity to trade its securities on an stock exchange outside its home country.
 GDRs allow issuers to raise capital in two or more markets
simultaneously, thus broadening their shareholder base.
GDRs- Cont..

6. AMERICAN DEPOSITORY RECEIPTS (ADRs)
 ADR is a dollar denominated form of equity ownership in the
form of depository receipts in a non- US company.
 ADRs are traded on NYSE, NASDAQ and AMEX in the United
States
 Who can Invest??
 American Institutional Investors
 American Retail Investors
 American PFs.

7. Legal FrameworkforIssuance of ADR/GDR
applicable on Indian Companies
Broadly the following Indian Statues govern the framework of ADR/GDR
Companies Act, 2013 read with applicable Rules;
Foreign Exchange Management Act, 1999;
Foreign Currency Convertible Bonds and Ordinary Shares9 Through Depository
Receipt Mechanism) Scheme, 1993 or any modification or re-enactment thereof;
SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015;

8. Requisites For Issuance of GDR/ADR
 Obtaining prior permission of the Department of Economic Affairs, Ministry of Finance,
Government of India.
 An Indian company, restrained from accessing the securities market by SEBI are not eligible to
issue Ordinary Shares through GDRs/ADRs.
 Unlisted Indian Companies issuing Global Depositary shall be required to simultaneously list in the
Indian Stock Exchange(s).
 Consistent track record of good performance (financial or otherwise) for a minimum period of 3
years
 Indian Companies registered in India and engaged in the following sectors, where 80% of turnover is
from these sectors of the operation/business of the company in the three previous financial
years, are eligible to offer GDRs/ADRs:
• Information Technology and Entertainment Software.
• Pharmaceuticals.
• Biotechnology.
• Any other activities within the knowledge based sector as notified by the
Government from time to time.

9. Requisites For Issuance of GDR/ADR
 Limits of foreign investment in the issuing company:
The ordinary shares issued against the GDRs/ADRs shall be treated as direct foreign investment in
the issuing company. The aggregate of the foreign investment made either directly or indirectly
(through Global Depositary Receipts Mechanism) shall not exceed 51% of the issued and
subscribed capital of the issuing company
 Taxation on shares issued under Global Depositary Receipt Mechanism
(1) Under the provisions of the Income-tax Act, income by way of dividend on shares will be taxed
at the rate of 10 per cent.
(2) All transactions of trading of the Global Depositary Receipts outside India, among
non resident investors, will be free from any liability to income-tax in
India on capital gains therefrom.
(3) Any transfer of shares upon conversion of Global Depository Receipts
will be liable to the provisions of capital gain prescribed under
Income Tax Act.

10. Depository Receipt
or Certificates
Domestic Depository
bank
Indian Resident
investors
Issuing Foreign
company
IDRs means any
instrument
Issued
to
Against issue of
ordinary shares/
securities
Foreign Companies Tapping Indian Equity
Markets- Indian Depository Receipts (IDRs)
In the form
of
Created
by

11. Legal Framework for Issuance of IDR
applicable on Foreign (Issuer) Company
Broadly the following Indian Statues govern the framework of IDR:
Companies Act, 2013 read with applicable Rules;
Foreign Exchange Management Act, 1999;
Directives of Reserve Bank of India, if any;
SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2009 or any modification or re-enactment thereof;
SEBI (Listing Obligation & Disclosure Requirements)Regulations,
2015;

12. ELIGIBILITY FOR ISSUE OF
IDRS
Eligibility of Foreign companies to issue IDRs as per Rule 13 of the
Companies (Registration of Foreign Companies) Rules, 2014 read with
Chapter X of the SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009:
Pre-issue Paid-up capital and free reserves- Min US$ 50 million;
Average Market Capitalization(during the last three years) in its parent
country- Min US$ 100 million;
continuously trading on a stock exchange in its parent or home
country (the country of incorporation of such company) – for Min three
years immediately preceding years;
It has a track record of distributable profits in terms of section 123 of
the Act, for at least three out of immediately preceding five years;
It fulfills such other eligibility criteria as may be laid down by the SEBI.

13. The size of anIDR issueshall not beless than Rs.50 crores
Additional requirements prescribed under Chapter X of
SEBI(ICDR) Regulations, 2009
Foreign issuer company shall:
 Be Listed in its Home country;
 Not prohibited to issue securities by any Regulatory body;
 have Good track record with respect to compliance with
securities market regulator.

14. 14
Requirements for investing in IDRs
• IDRs can be purchased by any person who is resident in India as
defined under FEMA.
• Minimum application amount in an IDR issue shall be Rs.
20,000/-
• Investments by Indian companies in IDRs shall not exceed the
investment limits, if any, prescribed for them under applicable laws;
• In every issue of IDR—
(i) At least 50% of the IDRs issued shall be subscribed to by QIBs;
(ii) The balance 50% shall be available for subscription by non‐
institutional investors.

15. Financial Players involved in issue of
Depository Receipts
• Listed Indian Issuer company
• Managers to Offer
• Underwriters
• Indian Custodian Bank
• Overseas Depository Bank
• Listed Foreign Issuer Company
• Merchant Banker registered with SEBI
• Underwriters
• Overseas Custodian Bank
• Domestic Depository Bank
GDRs/ ADRs
IDRs

16. Process Involved in Issuance of ADR/ GDR
Indian Issuer
Company
Indian
Custodian
Bank
Overseas
Depository
Bank
American/
Global Investors
1. Issuance of
Equity shares(in
Rs.) in the name of
Depository
These shares are
deposited with Custodian
3. Issues ADRs/GDRs (in
foreign currency,
generally dollars) to
Foreign Investors
2. Acts as an Agent of
Depository and holds
physical possession of
equity shares.
Depository
Agreement
Custodian
Agreement
Listing of
ADR/ GDR on
American
stock
Exchanges or
any other
Global Stock
Exchange
respectively.
Listing of
ADR/ GDR on
American
stock
Exchanges or
any other
Global Stock
Exchange
respectively.

17. Procedure of Issuance of IDRs
Foreign Issuer
Company
Overseas
Custodian Bank
Indian Depository
Bank
Indian Investors
SEBI
1. Prior written
approval- At least 90
days before opening
of the issue.
ROC
Indian Stock
Exchanges
2. Filing of
Prospectus
4. Issuance of Equity
shares(in Dollars) in
the name of Depository 5. Acts as a
Agent of
Depository
These shares are deposited
with Custodian
4. Issues IDRs (in Rs.) to
Indian Investors
3. Obtaining In-
principle listing
Approval

18. 07/07/16
Corporate Professionals Capital Private Limited
D-28, South Extension –I, New Delhi-110 049
Ph: +91.11.40622200; Fax: +91.11.40622201; E: pkvijay@indiacp.com
Pavan Kumar Vijay
Thank You