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TMI BlogIntroduction of new Chapter VIA in the SEBI (DIP) Guidelines, 2000X X X X Extracts X X X X X X X X Extracts X X X X ..... A copy of Chapter VIA is enclosed herewith in the Annexure. 3. This circular is being issued in exercise of powers conferred by Sections 11(1) and 11A of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 4. These amendments shall come into force from the date of the circular. This circular, along with the annexure, is available on SEBI website at www.sebi.gov.in. The entire text of SEBI (DIP) Guidelines, 2000, including the amendments issued vide this circular, is also available on SEBI website under the category "Issues and Listing". Yours faithfully, Parag Basu Annexure CHAPTER VIA OF THE SEBI (DIP) GUIDELINES, 2000 ISSUE OF INDIAN DEPOSITORY RECEIPTS (IDRs) PART I - GENERAL REQUIREMENTS 6A.1 PRELIMINARY The guidelines given in this chapter are in addition to the provisions of the Companies (Issue of Indian Depository Receipts) Rules, 2004 (hereinafter referred to as the IDR Rules) and not in derogation thereof. 6A.2 ELIGIBILITY FOR ISSUE OF IDRS No issuer shall make an issue IDRs unless: (i) it fulfills the eligibility criteria as specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision on the investments in the issue. 4. The prospectus shall also contain the information and statements specified herein 5. The issuing company shall, through a Merchant Banker file a prospectus or letter of offer certified by two authorized signatories of the issuing company, one of whom shall be a whole-time director and other the Chief Accounts Officer or the Chief Financial Officer, stating the particulars of the resolution of the Board or the shareholders by which it was approved, with the SEBI and Registrar of Companies, New Delhi, before such issue. They shall also certify that all the disclosures made in the prospectus are true and correct. 6. The agreement made with the domestic depository shall also be furnished along with the prospectus. 6A.7. DISCLAIMER 1. A disclaimer shall be made by the Merchant Banker (including a due diligence certificate) in the format specified in Schedule III 2. A statement will be made by the Issuer disclaiming responsibility for statements made otherwise than in the prospectus, as follows: "Our company, our directors and the Merchant Banker accept no responsibility for statements made otherwise than in the prospectus or in the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g required to do so; 17. 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; 18. Details of availability of prospectus and forms, i.e., date, time, place etc; 19. Amount and mode of payment seeking issue of IDRs 20. Disclosure on Investor Grievances and Redressal System: a. The arrangements or any mechanism evolved by the company for redressal of investor grievances. b. The past record (for a min period of 3 years before the date of the prospectus) of investor grievance redressal of the company and its listed subsidiaries/associates including details as to the time normally taken by it for disposal of various types of investor grievances. c. That the company undertakes to subject itself to the jurisdiction of Indian Courts having jurisdiction over the place where the stock exchange is situated regarding grievances of the applicants for IDRs 6A.11 RISK FACTORS & MANAGEMENT PERCEPTION, IF ANY 1. Risk factors shall be disclosed as follows: a. Risk factors associated with the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Regulatory framework in the Country of Incorporation/share listed concerning Dividends 4. Details of Arrangement with the Depositories for payment of Dividend to the IDR holders 5. Information about changes, if any, in dividends announced and dividends paid and time gap between the dividends announced and dividends paid. 6. Information about Dividend Yield. 7. Taxation aspects of dividend distribution. 6A.15 EXCHANGE RATES 1. Brief history of the pattern of Exchange rates between the Country of Incorporation/where shares are listed and India 2. High, Low, Average Rates for the last five years 3. High, Low, Average Rates for the last twelve months 6A.16 FOREIGN INVESTMENT AND EXCHANGE CONTROLS OF THE COUNTRY OF INCORPORATION/ WHERE SHARES ARE LISTED Information relating to the relevant foreign investment laws and exchange control regulations of the Country of Incorporation or country where the underlying equity shares are listed. 6A.17 OBJECTS OF THE ISSUE / USE OF PROCEEDS The following shall be disclosed: 1. purpose of the issue; 2. break-up of the cost of project for which the money is raised through the IDR issue; 3. the means of financing such project; and 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conciliation statement vis-à-vis Indian GAAP. If the same is prepared according to IFRS or US GAAP, a paragraph on summary of significant differences between Indian GAAP and IFRS or Indian GAAP and US GAAP, as the case may be, shall also be incorporated. b. Further, in case the report is prepared as per IFRS or US GAAP, the annual and quarterly financial results shall be audited by a professional accountant or certified public accountant or equivalent (by whatever name called in the issuer country) .in accordance with the International Standards on Auditing (ISA). The auditor's report shall also be prepared in accordance with the ISA. c. The above report needs to be stated on consolidated Basis or stand alone basis d. In case issuer country's accounting norms do not require a statutory Audit, such accounts shall be audited by a professional accountant or a certified public accountant 3. A report by domestic depository, as certified by an Accountant who is member of Institute of Chartered Accountants of India holding certificate of practice, upon profits or losses of the issuing company for each of the five financial years immediately preceding the issue of prospectus and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troduction of new products or services or increased sales prices; f. total turnover of each major industry segment in which the company operated g. status of any publicly announced new products or business segment; h. the extent to which business is seasonal; i. any significant dependence on a single or few suppliers or customers; j. competitive conditions. 6A.23 INDUSTRY AND BUSINESS OVERVIEW Market including details of the competition, past production figures for the industry, existing industry capacity, past trends and future prospects regarding exports (if, applicable), demand and supply forecasts (if given, should be essentially with assumptions unless sourced from a market research agency of repute), etc. to be given. Source of data used shall be mentioned. 6A.24 DETAILS OF THE ISSUER 1. Main object, history and present business of the company; 2. location of the project, if any; 3. Installed capacity and the details of plant and machinery, infrastructure facilities, technology etc., where applicable; 4. schedule of implementation of project and progress made so far, if applicable; 5. nature of product(s), consumer(s), industrial users; 6. Research and Developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enforcement of Indian Securities Laws would be affected by the fact that the issuer is located outside India 6A.28 DESCRIPTION OF THE INDIAN DEPOSITORY RECEIPTS AND RIGHTS OF IDR HOLDERS 1. Brief description of the Indian Depository Receipts 2. Dividends, Other Distributions and Rights of IDR holders 3. Voting rights and their manner of exercise by IDR holders, if any. 4. Record dates and how the same will be disclosed. 5. Reports and other communication to which the IDR holders will be entitled. 6. Conversion procedure of IDRs into shares 7. Governing Law regarding various aspects of IDRs and transactions therein. 6A.29 PROVISIONS REGARDING TRANSFER OF SHARES AND DEPOSITORY RECEIPTS 1. Provisions regarding transfer of IDRs 2. Outline of provisions regarding transfer of underlying shares after conversion 6A.30 INFORMATION RELATING TO THE DEPOSITARY - INDIAN & INTERNATIONAL Brief details of the Domestic Depositary, Overseas Custodian Bank and Depositary Agreement. 6A.31 APPROVALS OF THE GOVERNMENT/REGULATORY AUTHORITIES Information relating to statutory and regulatory approvals required in home country for the Issue and the related aspects and their status, and appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rease in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised. 6A.35 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION / MAIN CHARTER OF THE ISSUER 6A.36 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION Place at which inspection of the documents specified under Rule 6 of the Companies (Issue of Indian Depository Receipts) Rules, 2004, the prospectus, the financial statements and auditor's report thereof will be allowed during the normal business hours. 6A.37 OTHER INFORMATION 1. Disclosure of mandatory vetting of the prospectus by the legal counsel to the Issuer operating at the place where the registered office of the Issuer is situated. 2. Consent of Merchant Bankers, overseas custodian bank, the domestic depository and all other intermediaries associated with the issue of IDRs. 3. Fees and expenses payable to the intermediaries involved in the issue of IDRs PART III: APPLICABILITY OF THE PROVISIONS OF THE SEBI (DIP) GUIDELINES, 2000 Except Chapter VI, all other chapters of the SEBI (DIP) Guidelines, 2000 would apply to an issue of Indian Depository R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement that subscription to the issue shall be kept open for atleast 3 working days and not more than 10 working days 5.15 date of earliest closing of the issue; 5.16 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; 5.17 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; 5.18 details of availability of prospectus and forms, i.e., date, time, place etc; 5.19 amount and mode of payment seeking issue of IDRs 5.20 Disclosure on Investor Grievances and Redressal System: 5.21 That the company undertakes to subject itself to the jurisdiction of Indian Courts having jurisdiction over the place where the stock exchange is situated regarding grievances of the applicants for IDRs 6. Capital Structure of the issuer company Following details to be furnished: 6.1 Authorised, issued, subscribed and paid up capital (Number of instruments, description, aggregate nominal value). 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Only section numbers of the Income Tax Act and their substance should be mentioned, without reproducing the text of the sections) 8.5 Restrictions on investments in IDRs / fungibility of IDRs 9. Particulars of the Issue 9.1 Objects of the issue 9.2 Project cost 9.3 Means of financing 9.4 Name of Appraising Agency, if any 9.5 Name of Monitoring Agency, if any 10. Description of the Indian Depository Receipts and Rights of IDR Holders 10.1 Brief description of the Indian Depository Receipts 10.2 Dividends, Other Distributions and Rights of IDR holders 10.3 Voting rights and their manner of exercise by IDR holders, if any. 10.4 Record dates and how the same will be disclosed. 10.5 Reports and other communication to which the IDR holders will be entitled. 10.6 Conversion procedure of IDRs into shares 10.7 Governing Law regarding various aspects of IDRs and transactions therein. 11. Company, Management and Project 11.1 History and main objects and present business of the company. 11.2 Promoters / controlling shareholders and their background. 11.3 Names, address and occupation of manager, managing director, and other Directors (including nominee-directors and whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserve); 12.5 Sales; 12.6 Profit after tax (PAT); 12.7 Earnings per share (EPS); and 12.8 Net Asset Value (NAV); 13. Basis for Issue Price 13.1 Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital); 13.2 P/E pre-issue 13.3 Average return on net worth in the last three years 13.4 Minimum return on increased net worth required to maintain pre-issue EPS; 13.5 Net Asset Value per share based on last balance sheet; 13.6 Net Asset Value per share after issue and comparison thereof with the issue price. 13.7 Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group (i.e., companies of comparable size in the same industry. (Indicate the source from which industry average and accounting ratios of the peer group has been taken) Provided that the projected earnings shall not be used as a justification for the issue price in the prospectus. Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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