Framework for monitoring of foreign holding in Depository Receipts
Summary
This circular establishes a framework for monitoring foreign holding limits in Depository Receipts (DRs) under the Foreign Exchange Management Act, 1999. It designates an Indian Depository as the Lead entity to compute and disseminate DR information and headroom calculations to market participants. The document outlines specific operational procedures for Domestic Custodians, Stock Exchanges, and Depositories to ensure compliance with prescribed reporting formats and timelines.
Text
Indian Depositories were required to develop a system to monitor the foreign holding, including that held by way of DRs, as per the limits prescribed under the Foreign Exchange Management Act, 1999 and applicable SEBI Regulations, and disseminate the information regarding outstanding DRs and available limit for conversion.
Stock Exchanges and Depositories are advised to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above circular; and bring the provisions of this circular to the notice of the issuers, Domestic Custodians and also to disseminate the same on the website.
This circular is being issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992.
Listed Company shall appoint one of the Indian Depository as the Designated Depository for the purpose of monitoring of limits in respect of Depository Receipts.
The Designated Depository in co-ordination with Domestic Custodian, other Depository and Foreign Depository (if required) shall compute, monitor and disseminate the Depository Receipts (DRs) information as prescribed in the framework. The said information shall be disseminated on website of both the Indian Depositories.
Provide one-time details of DRs in the format and manner as may be prescribed by the Indian Depositories.
Ensure that the underlying permissible securities, pertaining to a listed company, against which DRs are issued in the Permissible Jurisdiction, are held in a demat account, under a separate Type & Sub-Type as prescribed by the Indian Depositories for the purpose of issue of DRs.
The Designated Depository shall forward the list of such companies (ISINs) for which it will be monitoring the DR issuance to Feed Depository. For any addition or deletion of ISINs, the Designated Depository shall communicate to the Feed Depository regarding the same through Incremental information sent on a periodic basis.
Feed Depository shall provide the ISIN wise demat holdings of investors tagged with separate sub-type to the Designated Depository on a daily basis.
The Designated Depository shall ascertain the details of holdings pertaining to Foreign Depository lying under demat account(s) tagged under such separate Type & Sub-Type as well as other investors with ‘DR’ sub type held at both depositories and consolidate such holdings to arrive at the outstanding Permissible Securities against which the DRs are outstanding.
Calculation of headroom i.e. ‘the limit up to which Permissible Securities can be converted to DRs’, may be undertaken in the following manner: Headroom = A – (B + C), where A is Number of DRs originally issued including corporate action, B is Outstanding Permissible Securities against which the DRs are outstanding, and C is Re-issuance approval granted by Domestic Custodian (unutilized) at End of Day.
The Indian Depositories shall exchange with each other their respective list of companies, for dissemination of DR headroom related information, which shall be consolidated by both depositories and thereafter published on their respective websites.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Framework for monitoring of foreign holding in Depository Receipts. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.