indian depository reciept

8/12/2019 Indian Depository Reciept

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This report does not constitute professional advice. The information in this report has been obtained or derived from sources believed by PricewaterhouseCoopers Pvt.Ltd. (PwC PL) to be reliable but PwC PL does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the

judgment of PwC PL at this time and are subject to change without notice. Readers of this report are advised to seek their own professional advice before taking anycourse of action or decision, for which they are entirely responsible, based on the contents of this report. PwC PL neither accepts or assumes any responsibility orliability to any reader of this report in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take.


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Contents

Introduction 04

Indian Depository Receipts 06

Eligibility Criteria 08

Other Conditions 09

Listing Procedure 10

Financial Statements Requirements 12

Continuing Obligation 15

How we can help? 16

Glossary 19


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4 Indian Depository Receipts - A new beginning

IntroductionThe world has become global village due to advancement in technology in recent years andinformation can be shared very rapidly across the globe. As a result, the securities marketshave become international and it has become easier to trade on international markets. Also, alot of countries have opened their securities markets to foreign investors and abolished lawsrestricting their citizens from investing abroad.

Companies that previously had to raise capital in the domestic market can now tap foreignsources of capital. Indian companies have listed American Depository Receipts (ADRs),Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs) inoverseas markets like New York, London, Luxembourg, Singapore etc. since 90s to raisefunds from international investors.

As the Indian securities markets have become deeper and with the BSE - Sensex andNSE - Nifty giving higher returns as compared to other indices in the world, global companieshave started showing interest in the Indian capital markets. In keeping with Indias ongoingpopularity as a preferred investment destination among international investors and Indiasaspirations to become a nancial hub in the South Asian region, the Government of India

has consistently introduced and modied various instruments through which investments

can be made.

Now a new beginning has been made. The Government of India has introduced the conceptof Indian Depository Receipts (IDRs) to facilitate listing by foreign companies on Indian stockexchanges. A foreign company can access Indian securities market for raising funds throughissue of IDRs.

A recent example is that of the global banking giant Standard Chartered Plc. which has raisedup to $1 billion (` 4,500 crore approximately) through IDRs. Further, foreign subsidiaries ofIndian companies can use IDR route for fund raising in India.

Major stock exchanges in India

Bombay Stock Exchange (BSE)

BSE is the oldest stock exchange in Asia established

in 1875.

BSE is ranked no.1 in terms of the number of listed

companies (over 4900).

It is the worlds 5th most active exchange in terms

of number of transactions handled through itselectronic trading system.

It is in the top ten of global exchanges in terms of the

market capitalization of its listed companies (as ofDecember 31, 2009).

BSE is the second stock exchange in the world to

obtain an ISO 9001: 2000 certication.

The BSE Index, SENSEX covers 30 companies.

National Stock Exchange (NSE)

NSE, established in April 1993, is the largest stock

exchange in India in terms of daily turnover andnumber of trades, for both equities and derivativetrading,

Worldwide ranked no. 2 for number of single stock

futures contracts traded and no. 14 for marketcapitalization (as of December 31, 2009).

Around 1450 companies listed on NSE.

Its index, S&P CNX Nifty is a well diversied stock

index covering 50 companies.

Besides above there are 20 regional stock exchangesin India.

A brief comparison of Indian indices with the otherindices is given on the next page.

(Source: www.bseindia.com, www.nseindia.com, www.world-exchanges.org)


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PricewaterhouseCoopers 5

Comparison of the major stock exchanges in Asia based onMarket Capitalisation

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1,000,000.0

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Market Capitalisation (USD millions)

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Shenzhen

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Indian indices Other indices

(Source: The World Federation of Exchanges (WFE) Market capitalization data as on December 2009. The WFE is association

of 52 regulated exchanges around the world.)

Broad equity market index performances among members of the World

Federation of Exchanges

Top 10 performing broad market indices in 2009, in local currency terms

Ranking Exchange % change 2009 / 2008

1 Colombo Stock Exchange 125.2%

2 Shenzhen Stock Exchange 117.1%

3 Buenos Aires Stock Exchange 103.6%

4 Lima Stock Exchange 101.0%

5 Istanbul Stock Exchange 96.6%

6 Bombay Stock Exchange 90.2%

7 National Stock Exchange India 88.6%

8 Indonesia Stock Exchange 87.0%

9 BM & FBOVESPA 82.7%

10 Shanghai Stock Exchange 80.0%

(Source: The World Federation of Exchanges 2009 Market Highlights. The WFE is association of 52 regulated exchanges

around the world.)


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Indian Depository ReceiptIndian Depository Receipt

An IDR is an instrument denominated in Indian Rupees (`) in the form of a depository receiptcreated by a domestic depository (custodian of securities registered with the Securities andExchange Board of India) against the underlying equity of issuing company to enable foreigncompanies to raise funds from the Indian securities markets.

In an IDR, foreign companies would issue shares, to a domestic (Indian) depository, whichwould in turn issue depository receipts to investors in India. The actual shares underlying theIDRs would be held by an Overseas Custodian, which shall authorize the Indian depository toissue the IDRs. To that extent, IDRs are derivative instruments because they derive their value

from the underlying shares.

Legislation

The Government of India notied the Companies (Issue of Indian Depository Receipts) Rules,

2004 {Companies IDR Rules}, amended till date, pursuant to Section 642 read with Section605 A of the Companies Act, 1956 of India.

Securities and Exchange Board of India (SEBI) has issued guidelines with respect to issue ofIDRs within SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 {SEBIICDR Regulations} as amended till date and notied the model listing agreement to be

entered between recognized Indian stock exchange and the issuing company specifying thelisting requirements of IDRs.

Further, the Reserve Bank of India (RBI) issued a circular in July 2009 to operationalise IDRs

from an exchange-control perspective.

Denomination

IDRs are issued by a domestic depository in India and denominated in`.

Listing

IDRs are listed on recognized stock exchanges in India.

Who can invest?

Following can invest, purchase, hold and transfer IDRs subject to relevant FEMA regulations:

Any person who is resident in India as dened under FEMA

SEBI registered Foreign Institutional Investors including their sub accounts Non-Resident Indians (NRIs)

Intermediaries involved in issuance of IDR

Overseas Custodianis a banking company which is established in a country outside Indiaand has a place of business in India and acts as custodian for the equity shares of issuingcompany against which IDRs are to be issued.

Domestic Depositoryis custodian of securities registered with SEBI and authorised by theissuing company to issue IDRs.

Merchant Bankerregistered with SEBI, is responsible for due diligence and through whomthe draft prospectus for issuance of the IDR is led with SEBI by the issuing company.


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Registrar and Transfer Agentprovides services to the issuing company, the domesticdepository and the IDR holders in India primarily being registration and transfer of IDRsin India. Examples of services include keeping records of the IDR holders, coordinatingcorporate actions and handling investor grievances.

Approvals for issue of IDRs

IDR issues require SEBI approval and application can be made for this purpose 90 daysbefore the proposed issue opening date.

Fungibility

Fungibility (the ability to convert IDRs into underlying shares) is not automatically permittedhowever; it can be converted to underlying shares of the issuing company after a one-yearmandatory lock-in period and subsequent to obtaining RBI approval.

In case of conversion, a listed company or mutual fund may continue to hold the underlyingshares; however, any other Indian investor would have to dispose of the underlying shareswithin 30 days of conversion.

Corporate Action

On receipt of dividends and other corporate actions on the IDRs, the domestic depositoryshall distribute them to the IDR holders as per deposit agreement.

Tax aspects

Presently, there are no specic provisions under the Indian Income Tax Act for taxation ofIDRs. However any income earned by way of dividends, capital gains or otherwise, would besubject to tax consequences on application of general provisions under the Indian IncomeTax Act and applicable Double Tax Avoidance Treaty (DTAA) entered into by the Governmentof India with respective countries around the world, as the case may be.

Recently, the revised Direct Taxes Code (DTC) to replace the existing Indian Income Tax Act

has been tabled in the Lok Sabha, the lower house of the Indian Parliament. Hence, investors

are advised to consult their tax advisors about the particular tax consequences on account of

investment in IDRs.

Benefts to the key stakeholders

Issuing companies:Any foreign company listed in its home country and satisfying theeligibility criteria can issue IDRs. A company which has signicant business in India can

increase its value through IDRs by breaking down market segmentations, reaching trappedpools of liquidity, achieving global benchmark valuation, accessing international shareholderbase and improving its brands presence through global visibility.

Investors:IDRs can lead to better portfolio management and diversication for investors by

giving them a chance to buy into the stocks of reputed companies abroad.

Employees:Foreign companies which do not have a listed subsidiary in India can giveemployee stock options (ESOPs) to the employees of their Indian subsidiaries through theIDR. This will enable the local employees to participate in the parent companies success.

Regulator:IDRs will lead to more liquid capital markets and a continuous improvement inregulatory environment, thereby increasing transactional revenues for the regulator.


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Eligibility CriteriaAs per Companies IDR Rules

As per Companies IDR Rules, as amended till date, the eligibility criteria to issue IDRs aregiven as follows:

Criteria Requirements

Capital Pre-issue paid-up capital and free reserves are at least US$50 million.

Market Capitalisation Minimum average market capitalization (during the last 3

years) in its parent country of at least US$ 100 million.

Operating history Continuous trading record or history on a stock exchange inits parent country for at least 3 immediately preceding years.

Track record of distributableprots

Track record of distributable prots in terms of section 205

of the Companies Act, 1956, for at least 3 out of immediatelypreceding 5 years.

Other requirements Fullls such other eligibility criteria as may be laid down bySEBI from time to time in this behalf.

As per SEBI ICDR RegulationsAs per SEBI ICDR Regulations, as amended till date, the following are additional requirementsfor IDR issue:


Additional requirementsfor issue of IDRs

The issuing company is listed in its home country;

The issuing company is not prohibited to issue securitiesby any regulatory body; and

The issuing company has track record of compliance withsecurities market regulations in its home country.

The term home country means the country where theissuing company is incorporated and listed.


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Other ConditionsCriteria Requirements

Issue size Issue size shall not be less than` 50 crore.

Minimum application amount Minimum application amount shall be`20,000.

Extent of issue The number of underlying equity shares offered in a nancialyear through IDR offerings shall not exceed 25 % of the postissue number of equity shares of the company.

Allocation of the issue Minimum 50% of the issue should be allotted to QualiedInstitutional Buyers* (QIBs) whereas 30% of the issue shouldbe offered to Retail Individual Investors* (RII) includingemployees*.

Balance 20% to be apportioned between Non-institutionalinvestors* (NII) and Employees at the discretion of the issuercompany.

Under-subscription in any retail investor categories can beadjusted against oversubscription in other categories exceptQIB.

Limits of investment Retail Individual Investors - Minimum of`20,000 andmaximum of` 100,000**.

Non-institutional investors - Above`100,000 and up to theissue size.

Qualied Institutional Buyer - Above`100,000 and up to theissue size.

No single individual or single entity or group of entities inIndia, other than QIBs, shall hold, directly or indirectly, IDRsexceeding 5% of the Issue. No single QIB or a group of QIBsshall hold IDRs exceeding 15% of the Issue.

Minimum subscription For non underwritten issues:If the issuing company does not receive minimumsubscription of 90% or subscription level falls below 90%

after the closure, it shall refund the entire subscriptionreceived.

For underwritten issues:

If the issuing company does not receive minimumsubscription of 90% within 60 days from the date of closureof issue, it shall refund the entire subscription received.

* Refer Glossary for details.** The SEBI Board in its meeting on October 25, 2010 decided that the maximum application size for retail individual

investors may be increased to` 2,00,000 across all issues.


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Listing ProcedureListing procedures as given in the Companies IDR rules, SEBI ICDR Regulations and Modellisting agreement are as follows:

As per Companies IDR Rules, no issuing company shall raise funds in India by issuing IDRsunless permission has been obtained from SEBI. An application is to be made to the SEBIat least 90 days prior to the opening date of the issue along with the relevant fees. TheSEBI, on receipt of an application, may call for such further information, and explanations,as may be necessary.

The issuing company shall obtain the necessary approvals or exemption from theappropriate authorities from the country of its incorporation under the relevant laws relatingto issue of capital, where required.

The issuing company shall appoint an overseas custodian bank, a domestic depositoryand a merchant banker for the purpose of issue of IDRs. The issuing company shall deliverthe underlying equity shares or cause them to be delivered to an Overseas Custodian Bankand the said bank shall authorize the domestic depository to issue IDRs.

The issuing company shall le through a merchant banker or the domestic depository a

due diligence report with the Registrar of Companies, New Delhi (ROC) and with SEBI.

The issuing company shall, through a merchant banker le a prospectus or letter of offer

certied by two authorized signatories (one of whom shall be a whole-time director and

other the Chief Accounts Ofcer), stating the particulars of the resolution of the Board by

which it was approved, with SEBI and ROC.

The Draft Red Herring Prospectus (DRHP) or draft letter of offer shall be led with SEBI,

through the merchant banker, at least 21 days prior to the ling of nal prospectus.The prospectus shall be examined by the SEBI. Investors can read and review the draftprospectus as it is a public document available on the SEBI website (www.sebi.gov.in).

If SEBI species any changes within 21 days, then the nal prospectus shall not be led

with the SEBI / ROC, unless such changes have been incorporated therein.

The issuing company shall obtain in-principle listing permission from one or morerecognized stock exchanges having nationwide trading terminals in India. The companyshall pay to stock exchange an initial listing fess as prescribed and maintain a securitydeposit of 1% of the amount of IDR offered for subscription to the public. The companyshall submit the following documents to the stock exchange:- A copy of a letter indicating the observation on the draft offer documents by SEBI- A certicate from a merchant banker acting as lead manager to the issue reporting

positive compliance by the issuing company of relevant SEBI regulations- Agreement between issuing company, overseas custodian bank, domestic depository,

merchant banker and registrar & transfer agent

The issuing company may appoint underwriters registered with SEBI to underwrite theissue of IDRs.

After SEBI gives its clearance, the company can set the issue dates and le the Red

Herring Prospectus (RHP) with the ROC at least 3 days before the Bid / Issue OpeningDate and will become a prospectus upon ling with the ROC after the pricing date. The

issuing company shall issue an advertisement in one English national daily newspaper andHindi national daily newspaper with wide circulation for issue of IDR.

The issue will be kept open for a xed number of days, and investors can submit their

application forms at the bidding centers. The investors will bid within the price band and

the nal price will be decided post the closure of the Issue. Allotment of IDRs offered to thepublic shall be made within 15 days of the closure of the public issue.


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Pre listing

Offering process

Listing on StockExchange

Eligibility reviewand public offering

Drafting a plan for IDR issue with necessary Board andshareholder approval, as may be applicable

Formation of working group including auditors, legal counsel

Preparation of nancial statements

Audit of nancial statements

Appointment of merchant bankers, overseas custodian,domestic depository and registrar & transfer agent

Due diligence by the merchant bankers

Drafting of offering circulars

Issue will be open for a xed number of days

Investors to bid within the price band and nal price to be

decided at the closure of issue

IDRs to be allocated to the investors

Application to SEBI for the purpose of listing IDRs along with thedraft red herring prospectus (along with due diligence report)

Approval by SEBI for prospectus

Submission of nal prospectus to ROC.

Permission from the Stock Exchanges

Marketing of the issue

Key Procedures

Rights issue framework for IDRs

In order to facilitate simultaneous rights offering by the issuing companies (who have theirIDRs on Indian Stock Exchanges) in their home jurisdiction and in India, SEBI Board in itsmeeting on 25th October 2010 has decided to notify the framework for rights issue of IDRs.Further, it is decided that IDR issuers, who are in compliance with the continuous listingrequirements, can avail the facility of ling the offer document on fast track basis. Final

guidelines are awaited by SEBI on these matters.

Please note that above mentioned procedures are indicative, and not exhaustive. Refer CompaniesIDR Rules, SEBI ICDR Regulations and Model listing agreement amended from time to time for

complete list of procedures.


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Financial StatementsRequirements

As per SEBI ICDR regulations, a prospectus for IDR issue shall contain all detailsas specied herein:


The audited consolidatedor unconsolidated nancial

statements

The audited consolidated or unconsolidated nancial

statements of the foreign issuing company, as perIndian GAAP or IFRS or US GAAP, for a period of 3nancial years immediately preceding the date of

prospectus containing the following:

Report of Auditors on the Financial Statements

Balance Sheets

Statements of Income

Schedules to Accounts

Statements of Changes in Stockholders Equity

Statements of Cash Flows

Statement of Accounting Policies

Notes to Financial Statements

Statement Relating to Subsidiary Companies (in

case of unconsolidated nancial statements)

Related Party transactions

Liquidity and Capital Resources.

Reporting currency The nancial information in the prospectus shall bedisclosed in the foreign issuing companys functionalcurrency / reporting currency / national currency andthe reporting currency shall be restricted to SterlingPound / Euro / Yen / US Dollar.

Audit requirement in case ofIFRS / US GAAP

In case, the nancial results are prepared as per IFRSor US GAAP, it shall be audited by a professionalaccountant or certied public accountant or equivalent

(by whatever name called in the home country as perInternational Standards on Auditing (ISA)).

Audit report If the law of the home country requires annual statutoryaudit of the accounts of the foreign issuing company, areport of the statutory auditor for each of the 3 nancial

years preceding the date of the prospectus.

If the law of the home country does not require annualstatutory audit, a report, as per Indian GAAP certied

by Chartered Accountant in practice for each of the 3nancial years preceding the date of the prospectus.

The gap between date of opening of issue and date ofreport shall not exceed 120 days.


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Translation to INR (`) The report prepared by the statutory auditors of theissuing company / Chartered Accountant shouldbe on the nancial statements as prepared by the

management of the issuing company. Financialstatements shall be translated in Indian Rupees (atthe closing rate of exchange, as at the date on whichthe nancial information is presented), compiled

in a tabular form and include the consolidated orunconsolidated income statement, consolidated or

unconsolidated cash ow statements, consolidated orunconsolidated balance sheet and the capitalisationstatement as given below:

Particulars Pre-issue as Figures in`Crores

Short-Term Debt XX

Long Term Debt XX

Shareholders Funds

Share Capital

Reserves

XX

XX

Total Shareholders Funds XX

Long Term Debt/Equity XX

Interim audited (consolidatedor unconsolidated) nancial

statements

If the gap between the ending date of the latestaudited (consolidated or unconsolidated) nancial

statements and the date of the opening of the issue ismore than 180 days then interim audited (consolidatedor unconsolidated) nancial statements in respect of

the period ending on a date which is less than 180days prior to the date of opening of the issue have tobe included in the report

If the gap is 180 days or less, then disclosures inrespect of material changes in the nancial position

of foreign issuing company for such gap are disclosedin prospectus.

However, in case of a foreign bank incorporatedoutside India and which is regulated by a member ofthe Bank for International Settlements or a memberof the International Organization of SecuritiesCommissions which is a signatory to a MultilateralMemorandum of Understanding, nancial statements

based on limited review report of statutory auditorwould sufce.


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Reconciliation statement /Summary of signicant differences

In case the foreign issuing company opts to prepareand disclose the nancial results as per US GAAP, a

quantitative reconciliation statement vis-a-vis IndianGAAP and narrative summary of signicant differences

between the Indian GAAP and US GAAP has to beannexed with the report. If nancial results are prepared

as per IFRS, then narrative summary of signicant

differences between Indian GAAP and IFRS need tobe annexed.

Subsidiaries and Associates of theissuing Company

The following information for the last 3 years based onthe audited statements in respect of subsidiaries andassociates of the issuing company:

Date of Incorporation

Nature of activities

Equity Capital

Reserves (excluding revaluation reserve)

Sales

Prot after tax (PAT)

Earnings per share (EPS) and

Net Asset Value (NAV)If the subsidiaries and associates are not required toprepare audited statements as per the laws prevailingin those countries, the same is to be certied as

true and correct by the Board of Directors and themanagement of such companies, provided a certicatefrom a certied public accountant or equivalent

practicing in the concerned country is submitted to theBoard of Directors.


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Continuing ObligationCompanies whose IDRs are listed in India, are required to make timely and accuratedisclosure of material corporate information for regulatory and investor relations purposes ona continuing basis:

Annual nancial results

Submission of complete annual report to the Indian stock exchanges and SEBI includingaudited nancial statements, directors report and auditors report etc. in such manner

and format and within such time as required to be disclosed as per listing requirements ofhome country.

Send complete annual report to each IDR holder at the same time when it is made

available to the shareholders as per the requirements of home country. The issuing company shall comply with Indian GAAP or IFRS or US GAAP in preparation

and disclosure of nancial results. The format of the disclosure of the nancial statements

shall be as per disclosure requirements of the issuing company in the home country wherethe issuing company is listed. If Indian GAAP is followed in preparation of nancial results

then the format of disclosure of nancial results shall be as prescribed by SEBI.

In case, the nancial results are prepared as per IFRS or US GAAP, it shall be audited by

a professional accountant or certied public accountant in accordance with International

Standards on Auditing (ISA). In case the issuing company opts to prepare and disclosenancial results as per Indian GAAP, it shall be audited by a Chartered Accountant in

accordance with the auditing and assurance standards issued by ICAI.

In case the issuing company opts to prepare and disclose the nancial results as per US

GAAP, a quantitative reconciliation statement vis-a-vis Indian GAAP and narrative summaryof signicant differences between Indian GAAP and US GAAP has to be annexed with the

report. If nancial results are prepared as per IFRS, then narrative summary of signicant

differences between Indian GAAP and IFRS need to be annexed.

Explanatory statement as to how audit qualications in respect of audited nancial

statements of the previous accounting year have been addressed in the current yearnancial results.

Disclosures of its nancial information in its functional currency/reporting currency/national

currency and the reporting currency shall be restricted to Sterling Pound/Euro/Yen/USDollar.

The issuing company shall provide convenience translation into Indian Rupees (`) of thelatest years statements of consolidated prots and losses, assets and liabilities and cash

ows, at the closing rate of exchange, as at the date on which the nancial informationis presented.

Publish annual results at least one English national daily and one Hindi national dailynewspaper in India.

Periodic nancial results

The issuing company shall le periodical audited nancial results or un-audited nancial

results subject to limited review by the Auditors, prepared in accordance with Indian GAAPor IFRS or US GAAP with Indian stock exchanges in such manner and within such time andas to the extent that it is required to le as per the listing requirements of home country.

Please note that GAAP / Audit / disclosure requirements for periodic nancial results are

same as given above for the annual results.

Publish periodical results at least one English national daily and one Hindi national daily

newspaper in India.


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Other key compliances / disclosures

Appointment of a company secretary as Compliance Ofcer of the issuing company who

would liaise with the authorities such as SEBI, Stock Exchanges, ROC etc.

Corporate governance report as per requirements of home country and comparativeanalysis with the corporate governance provisions applicable to Indian listed companies.

Declaration of dividend, right issue, issue of convertible debentures, bonus, split, options,buy-back, delisting etc.

Increase in capital, reissue of forfeited shares, any alteration of capital and any otherinformation to enable IDR holders to appraise the issuing companys position.

Any change in board of directors, managing director, compliance ofcer, auditors, registrar,domestic depository and overseas custodian bank.

Copies of notices, resolutions and proceedings of Annual General Meeting andExtraordinary General meeting of the issuing company.

Mergers, amalgamations, reconstruction, take-over, reduction of capital and any scheme/arrangement involving the issuing company.

Send proxy forms to IDR holders so that voting rights can be exercised in accordance withthe deposit agreement.

Submission of IDR holding pattern statement to stock exchanges on quarterly basis

Inform material events having bearing on performance / operations of company and otherprice sensitive information both at the time of occurrence of the event and cessation of theevent so as to enable the shareholders and public to appraise the position of the company.

Payment of annual listing fee / custodian fee etc.

Notes:

1.Note that above listing compliances are based on the Model listing Agreement (as issuedby SEBI in circular dated June 16, 2009) for listing of IDRs issued by the issuing companieswhose market regulator is signatory to Multilateral Memorandum of Understanding (MMOU) ofInternational Organisation of Securities Commission (IOSCO). For others, existing IDR listingagreement would continue to apply which include additional requirements like adherence toIndian corporate governance provisions, submission of Compliance certicate etc.

2.The issuing company needs to notify the Indian stock exchanges at the same time it intimatesany of the abovementioned disclosure to the stock exchange where its equity shares are listed.

3.All correspondence should be in English language.4.These compliances are indicative and not exhaustive. Refer Companies IDR Rules, SEBI ICDR

Regulations and relevant Model Listing Agreement amended from time to time for complete listof compliances.


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How we can help?At PricewaterhouseCoopers, we have created the Global Capital Markets Group (theGCMG), a dedicated team of professionals who specialise in providing technical, strategicand project management advisory services to companies interested in accessing the U.S.,European or Indian capital markets and/ or applying IFRS / US GAAP / Indian GAAP whileconverting the nancials from local GAAP. We also assist companies in embedding these

accounting requirements into the nancial reporting systems to enable companies to report

on a sustainable basis and provide training to management and accounting teams.

GCMG India has been serving Indian and foreign companies over the last 12 years in theirendeavour to access Indian and overseas capital markets and in applying IFRS / US GAAP/ Indian GAAP with a global set-up, we combine our knowledge of local business practices

(including SEBI / Stock Exchange compliances) and draw upon expertise from our colleaguesaround the world to suit an engagement. This gives us an unparalleled understanding ofthe issues and solutions that will work for companies from any industry and with everyconceivable nancial structure.

GCMG Worldwide MAP

CHICAGO

FRANCE

NORWAY RUSSIA

KOREA

JAPAN

TAIWAN

HONG KONG

AUSTRALIA

SOUTH

AFRICA

CHINA

DENMARK

BELGIUM

ISRAEL

ITALYINDIA

SINGAPORE

BRAZIL

SPAIN

SWITZERLAND

GERMANY

UNITED KINGDOM

NETHERLANDS

DALLAS

NEW YORK

MEXICO

CHILE

ARGENTINA

SAN FRANCISCO


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Our Services

As you deal with the challenges of managing your business during an offering, listing orconversion project, we can team up with you to anticipate and resolve nancial statement

requirements and regulatory process issues that could pose serious challenges to yourproject or cause you to incur costly delays. Our services include:

Evaluation of IDR route as an alternative to raise capital;

Assistance in understanding key regulatory processes, issues and consequent taximplications relating to capital market instruments (including IDRs);

Assisting organizations in meeting nancial statements requirements to prepare them for a

listing or to raise capital (including IDRs);

Implementation support for IFRS/ US GAAP/Indian GAAP by way of technical advisoryon GAAP requirements and/or preparation of reconciliation and summary of GAAPdifferences; and

Providing training in enhancing knowledge of IFRS/ US GAAP/Indian GAAP withinan organization.

Ongoing support for continuing obligations for companies whose IDRs are listed in India.


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GlossaryCompanies IDR Rules The Companies (Issue of Indian Depository Receipts) Rules,

2004, as amended till date

Deposit agreement Agreement entered into between the issuing company anddomestic depository

Draft Red Herring Prospectus(DRHP)

Draft red herring prospectus issued in accordance with theCompanies IDR Rules, SEBI ICDR Regulations, which doesnot contain complete particulars on the price at which theIDRs are offered

Employee Employee shall mean a person who,-

is a resident of India, and

is a permanent and full-time employee or a director,whether whole time or part time, of the issuer or of theholding company or subsidiary company or of the materialassociate(s) of the issuer, whose nancial statements are

consolidated with the issuers nancial statements, working

in India and does not include promoters and an immediaterelative of the promoter (i.e. any spouse of that person,or any parent, brother, sister or child of the person or ofthe spouse

Foreign Institutional Investor (FII) Foreign Institutional Investor(s) as dened under the SEBI(Foreign Institutional Investor) Regulations, 1995 registeredwith the SEBI.

FEMA Foreign Exchange Management Act, 1999 as amended fromtime to time

Home country The country where the issuing company is incorporatedand listed

GAAP Generally Accepted Accounting Principles

ICAI The Institute of Chartered Accountants of India

IFRS International Financial Reporting Standards as issued by IASB

Income tax act The Income Tax Act, 1961 of India as amended from timeto time

Issuing Company A company incorporated outside India, making an issue of IDRsthrough a domestic depository

Merchant Banker A merchant banker dened in clause (e) of Rule 2 of SEBI(Merchant Bankers) Regulations, 1992, as amended fromtime to time


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Mutual Fund A mutual fund registered with the SEBI under the SEBI(Mutual Funds) Regulations, 1996, as amended from timeto time

Non Institutional Investor (NII) All Bidders that are not QIBs or Retail Individual Bidder(s) andwho have Bid for IDRs for an amount of more than`100,000.

Prospectus The prospectus to be led with the ROC as per section 605of the Companies Act and rule 5(2)(vi) of the Companies IDRRules, containing, inter alia, the Issue Price that is determined

at the end of the Book Building process, the size of the Issueand certain other information

Qualied Institutional Buyer

(QIB)A Qualied Institutional Buyer means a public nancialinstitution as dened in section 4A of the Indian Companies

Act, a scheduled commercial bank, a Mutual Fund, an FIIand sub-account registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, amultilateral and bilateral development nancial institution, a

state industrial development corporation

Red Herring Prospectus (RHP) The red herring prospectus to be issued in accordancewith the applicable provisions of the Indian Companies Actand the SEBI Regulations, which will not have complete

particulars of the price at which the IDRs are offered. The RedHerring Prospectus will be led with the ROC at least three

days before the Bid/Issue Opening Date and will become aProspectus upon ling with the ROC after the Pricing Date.

Retail Individual Investors (RII) Individual Investors (including HUFs applying through theirKarta and eligible NRIs) who have not bid for IDRs for anamount of more than`100,000 in any of the bidding options.

ROC Registrar of Companies, New Delhi

SEBI Securities and Exchange Board of India

SEBI (ICDR)Regulations

SEBI (Issue of Capital and Disclosure Requirements)Regulations, 2009 as amended till date


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Notes


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About PricewaterhouseCoopers

PricewaterhouseCoopers (www.pwc.com) provides industry-focused tax and advisoryservices to build public trust and enhance value for our clients and their stakeholders.More than 163,000 people in 151 countries across our network share their thinking,experience and solutions to develop fresh perspectives and practical advice.

At PricewaterhouseCoopers (PwC), we push ourselves - and our clients - to think harder,to understand the consequences of every action and to consider new perspectives. Ourgoal is to deliver a distinctive experience to our clients and people around the world.

In India, PwC (www.pwc.com/India) offers a comprehensive portfolio of Advisory andTax & Regulatory services; each, in turn, presents a basket of nely dened deliverables.

Complementing our depth of industry expertise and breadth of skills is our soundknowledge of the local business environment in India. We are committed to working

with our clients in India and beyond to deliver the solutions that help them take on thechallenges of the ever-changing business environment.

PwC has ofces in Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Delhi NCR,

Hyderabad, Kolkata, Mumbai and Pune.


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pwc.com/india

ContactTo have a deeper discussion about IDRs, please contact:Sanjay Hegde Arvind Daga

Phone: +91-9820062484 Phone: +91-9820608729

E-mail: [email protected] E-mail: [email protected]

Nitin Khullar

Phone: +91-9810072170

E-mail: [email protected]

September2

010IndianDepositoryReceipts.indd

dby:PwCBrand&Communications

indian depository reciept

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