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TMI BlogADR/GDR/FCCB IssuesX X X X Extracts X X X X X X X X Extracts X X X X ..... ubject to compliance with provisions of the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Central Government from time to time. 2. The Operative Guidelines for Disinvestment of shares by the Indian companies in the overseas market through issue of ADRs/GDRs as notified by the Government of India, Ministry of Finance vide Notification No.15/23/99-NRI dated 29th July 2002 are enclosed. 3. Government of India, Ministry of Finance has also issued Press Note No.15/4/2002-NRI on July 8, 2002 (copy enclosed) regarding utilisation of ADR/GDR/FCCB proceeds in the first stage acquisition of shares in the disinvestment process and also in the mandato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng company, whose shareholders propose to divest existing shares in the overseas market through issue of ADRs/GDRs will give an option to all its shareholders indicating the number of shares to be divested and the mechanism how the price will be determined under the ADR/GDR norms. If the shares offered for divestment are more than the pre-specified number to be divested, shares would be accepted for divestment in proportion to existing holdings. v. The proposal for divestment of the existing shares in the ADR/GDR market would have to be approved by a special resolution of the company whose shares are being divested. vi. The proceeds of the ADR/GDR issue raised abroad shall be repatriated into India within a period of one month of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue expenses shall be passed onto the shareholders participating in the sponsored issue on a pro-rata basis. xiii. The shares earmarked for the sponsored ADR/GDR issue may be kept in an escrow account created for this purpose and in any case, the retention of shares in such escrow account shall not exceed 3 months. xiv. If the issues of ADR/GDR are made in more than one tranche, each tranche would have to be treated as a separate transaction. xv. After completing the transactions, the companies would need to furnish full particulars thereof including amount raised through ADRs/GDRs, number of ADRs/GDRs issued and the underlying shares offered, percentage of foreign equity level in the Indian company on account of issue of ADRs/GDRs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to mobilise huge sums of money for purchasing such stocks. The domestic bidders might suffer from two structural constraints. One relates to the restriction on bank financing to capital market and another relates to exposure limits to borrowers. Therefore, attention has been drawn to the prohibition of end-use of proceeds of ADRs/GDRs/FCCBs/ECBs. The view is that this prohibition not only puts restrictions on Indian bidders in the first stage offer to the Government, but also to fund the second stage of mandatory public offer under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. 3. In view of the Government's policy to promote the disinvestment programme of PSU shares, the matter has been reconsidered. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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