Issues IDR’sIssues equity shares

Compiled by: CA Vidhi Dedhia L- 12 India Depository

L.12 Indian depositary

Indian market is getting integrated with the global market through IDR

Meaning of IDR: Means any Instrument In form of a depository receipt Created by domestic depository in India

Against the underlying equity shares of issuing company

The equity shares of issuing company against which IDR’s are issued and held by overseas custodian bank Issuing Co. has equity shares ,it can create IDR against it Domestic depository in India creates IDR’s from such equity shares

Issuing co. Domestic depository Indian stock exchange

Overseas custodian bank Indian Investor

Eligibility criteria for IDR :- I DR can be issued by an issuing Company subject to satisfaction of following conditions:

C T P-D E S ( c) Capital criteria – issuer company pre issues PUC+fre reserves > US $ 50 millions

(t) Turn over criteria – average Turnover, Last 3 preceding Financial year > or equal to US $ 100 millions

(p) profit & dividend criteria - continuous profit for last 5 years preceding the issue & declaring dividends > or equal to 10% each years

D/E: debt equity ratio 2:1 S – SEBI Approval

Conditions for issue of IDRS

QLI, Success Oriented Coaching for CA & CS I www.qli.co.in I 90290 83303 / 99203 83303 Page 1

Compiled by: CA Vidhi Dedhia L- 12 India Depository

A ccording to SEBI (ICDR) reg, 2009 following conditions shall he satisfied:

1. Issue size > or equal to Rs 50crores2. Procedure – to be followed by each class of applicant for Applying as mentioned in prospectus 3. Minimum application amount = Rs. 20,0004. IDR allotment 100%

a. At least 50% > or equal to 50% Balance b. QIB’s- qualified institutional buyers on can be alloted to other categories of

5. Proportionate bases * - -non- institutional buyers a. Retail individual investors including

i. Employees of issuing Co. 6. At any given time, only 1denominations of IDR can be issued by the company.

Listing of Indian depository receipts

The IDR’s issued should be listed on the recognized stock exchange(s) in India as specified Such IDR’s may be purchased, possessed and freely transferred by a person resident in India. However, the IDR’s issued by an issuing company may be purchased, possessed and transferred

by a person other than a person resident in India if such issuing company obtains specific approval from RBI in this regard or complies with any policy or guidelines that may be issued by RBI on the subject matter.

QLI, Success Oriented Coaching for CA & CS I www.qli.co.in I 90290 83303 / 99203 83303 Page 2