FCCB AND ORDINARY SHARES (THROUGH DEPOSITORY RECEIPT MECHANISM)SCHEME, 1993 :
DEFINITIONS
Domestic Custodian Bank
It means a banking company which acts as a custodian for the ordinary shares or Foreign Currency Convertible Bonds of an Indian Company which are issued by it against Global Depository Receipts or certificates.
Foreign Currency Convertible Bonds
It means bonds issued in accordance with this scheme and subscribed by a non-resident in foreign currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or in part, on the basis of any equity related warrants attached to debt instruments.
Global Depository Receipts
It mean any instrument in the form of a Depository receipt or certificate (by whatever name it is called ) created by the Overseas Depository Bank outside India and issued to non-resident investors against the issue of ordinary shares or Foreign Currency Convertible Bonds of issuing company.
Issuing Company
It means an Indian Company permitted to issue Foreign Currency Convertible Bonds or ordinary shares of that company against Global Depository Receipts.
Overseas Depository Bank
It means a bank authorised by the issuing company to issue Global Depository Receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company.
FCCBs are governed by the ‘Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depositary Receipt Mechanism) Scheme, 1993’ as amended from time to time and Notification FEMA No.120/ RB-2004 dated July 7, 2004. The issuance of FCCBs was brought under the ECB guidelines in August 2005 In addition to the requirements of (i) having the maturity of the FCCB not less than 5 years, (ii) the call & put option, if any, shall not be exercisable prior to 5 years, (iii) issuance of FCCBs only without any warrants attached, (iv) the issue related expenses not exceeding 4% of issue size and in case of private placement, shall not exceed 2% of the issue size, etc. as required in terms of Notification FEMA No. 120/RB-2004 dated July 7, 2004,FCCBs are also subject to all the regulations which are applicable to ECBs.