Framework for issue of Depository Receipts

SEBI/HO/MRD/DOP1/CIR/P/2019/106 · 2019-10-10 · SEBI

Summary

This circular establishes the regulatory framework for Indian listed companies to issue Depository Receipts (DRs) under Section 41 of the Companies Act, 2013. It defines eligibility criteria for issuers and existing holders, specifying prohibitions against debarment, wilful default, or fugitive economic offender status. The document outlines obligations regarding permissible jurisdictions, underlying securities, foreign holding limits, and filing procedures with SEBI and stock exchanges. This section mandates that voting rights on Depository Receipts must be exercised via instructions from the holder through the Foreign Depository. It establishes pricing floors for DR issuance to ensure they are not less than prices offered to domestic investors in comparable transactions. The text further outlines obligations for Indian and Foreign Depositories and Domestic Custodians regarding holding limits, record-keeping, and issuance protocols.

Text

only ‘a company incorporated in India and listed on a Recognized Stock Exchange in India’ (‘Listed Company’) may issue Permissible Securities or their holders may transfer Permissible Securities, for the purpose of issue of Depository Receipts (‘DRs’), subject to compliance with the following requirements:

Listed Company is in compliance with the requirements prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and any amendments thereof.

the Listed Company, any of its promoters, promoter group or directors or selling shareholders are not debarred from accessing the capital market by SEBI;

the listed company or any of its promoters or directors is not a wilful defaulter;

any of its promoters or directors is not a fugitive economic offender.

Existing holders shall be eligible to transfer Permissible Securities, for the purpose of issue of DRs, if: (a) the Listed Company or the holder transferring Permissible Securities are not debarred... (b) ...not a wilful defaulter; (c) ...not a fugitive economic offender.

For the purpose of an initial issue and listing of DRs, pursuant to ‘transfer by existing holders’, the Listed Company shall provide an opportunity to its equity shareholders to tender their shares for participation in such listing of DRs.

A company proposing to make a public offer... may seek in-principle and final approval... However, such issue or transfer of Permissible Securities for the purpose of issue of DRs shall be subsequent to, the receipt of trading approval from the Recognized Stock Exchange for the public offer.

Listed Company shall be permitted to issue Permissible Securities or transfer Permissible Securities of existing holders, for the purpose of issue of DRs, only in Permissible Jurisdictions and said DRs shall be listed on any of the specified International Exchange(s) of the Permissible Jurisdiction.

Listing of DRs on specified International Exchange shall meet the highest applicable level / standards for such listing by foreign issuers.

Listed Company shall ensure compliance with extant laws relating to issuance of DRs, including, requirements prescribed in this Circular, the Companies Act, 2013, the Foreign Exchange Management Act, 1999 (‘FEMA’), Prevention of Money-Laundering Act, 2002, and rules and regulations made thereunder.

Listed Company shall ensure that DRs are issued only with Permissible Securities as the underlying.

Source: SecMarx — Framework for issue of Depository Receipts. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.