Companies going for overseas listing can now breathe easy, as the government has amended the ADR/GDR norms to allow them such issues for companies going for simultaneous listing of their shares or follow-on offers in international capital market.
However, the companies have to take the permission of market regulator SEBI and make the follow on offer within 30 days.
In a notification, the finance ministry said companies going in for an offering in the domestic market and a simultaneous or immediate follow on offering through ADR (American (depository Receipts)/GDR (Global Depository Receipts) issues would be exempt from the requirement of the revised pricing guidelines.
The change in ADR/GDR comes after representation from India Inc on the pricing norms.
However, the ministry said simultaneous or immediate follow on offering in the ADR/GDR market will have to take Sebi's approval for the percentage to be offered in the domestic and ADR/GDR markets. While amending the norms for listed companies, the ministry said unlisted companies already having global depository receipts or foreign currency convertible bonds in the international market, will have to list in the domestic market by March 31, 2006.
To prevent tainted companies from issuing ADR/GDR or FCCB or subscribing to such issues of other companies, the ministry said all other conditions, including eligibility of issuer and subscriber, would continue to be applicable to all companies.
A scheme for 'Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme' was notified by the Government of India on 12th November, 1993. Revisions and modifications in the operative guidelines of the scheme have been made from time to time.
In order to bring the ADR/GDR guidelines in alignment with Sebi's guidelines on domestic capital issues, amendment to the 'Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme', 1993," was made on 31st August, 2005.
In order to remove hardship to Indian companies which have taken verifiable 'effective steps,' before 31st August, 2005, and incurred costs for overseas issues, the government made further amendment to the FCCB norms on September 14, 2005.
