Procedure for Getting Approval :

Where the approval is required, the following procedure is required to be followed:

An eligible issuing company shall make an application to the Government of India, Ministry of Finance, Deptt. of Economic Affairs, New Delhi, for obtaining ‘In-principle’ approval.

The application should set out in detail the following points:

(a) Proposed project or expansion or diversification programme with details of cost of project and means of financing.

(b) The proposed security viz. Global Depository Receipts (GDRs) or American Depository Receipts (ADRs) against underlying shares or Foreign Currency Convertible Bonds.

(c) In the case of Bonds, particulars of redemption period, rate of interest, time of conversion of bonds to equity shares of the company, price at which such conversion will take place.

(d) In the case of GDRs/ADRs, the price at which the equity shares will be issued.

(e) Justification for the foreign issue.

(f) Other details about the company such as management, financial date, capacity and its utilisation, financial results and management ratios, statutory liabilities, default in respect of interest/installments, of loans from Banks/Financial Institutions. Exports and imports and salient features of the prospective corporate plans and diversification proposals with special reference to foreign exchange requirements.

The Government of India will, if satisfied with the company’s proposals, issue an approval in principle granting permission to the company to mobilise foreign currency resources for a specified amount.

On completion of finalisation of issue structure in consultation with the Lead Manager to the issue, the company should obtain the final approval from the Government.

However, in some cases Foreign Investment Promotion Board (FIPB) clearance is necessary before finalapproval is given by the Finance Ministry.

Both ‘in principle and final’ approvals are valid for 3 months respectively from the date of issue.