REGULATORY FRAMEWORK OF IDRs – AN OVERVIEW :
Regulatory Bodies
• The Securities and Exchange Board of India
• The Ministry of Corporate Affairs
• The Reserve Bank of India
Statutes Governing IDRs
• Section 390 of the Companies Act, 2013
• Rule 13 of the Companies (Registration of Foreign Companies) Rules, 2014
• Chapter X & XA of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 Date
| Date | Issuing authority | Legislation | Effect | |||
| December 13, 2000 | Ministry of Corporate Affairs, Government of India, (MCA) | Insertion of section 605 A to the Companies Act, 1956 | Enabling section to permit foreign companies to issue IDR’s as a security to investors in India | |||
| February 23, 2004 | MCA | IDR Rules | Created Framework for issue of IDR’s | |||
| April 3, 2006 | SEBI | DIP Guidelines | Disclosure requirements for listing IDR’s specified | |||
| April 3, 2006 | SEBI | SEBI Circular SEBI/CFD/DIL/DIP/20/ 2006/3/4
Model Listing Agreement |
Provided the model terms and conditions of an agreement between the issuing company and the stock exchanges for listing IDR’s on Indian stock exchange | |||
| July 11, 2007 | MCA | IDR Rules | Relaxation of eligibilty criteria for
issue of IDR’s |
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| November 29, 2007 | SEBI | DIP Guidelines | Permitting retail investors to
subscribe to IDR’s |
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| January 19, 2009 (January 2009 Amendments) | MCA | IDR Rules | • Removal of one (1) year lock in for conversion from IDR to Equity Shares
• Permitting issue of IDRs to persons other than persons resident in India.
• Overseas Custodian Bank need not have a place of business in India. |
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| April 13, 2009
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SEBI | Approving proposal in its Board Meeting | Enable a) mutual funds and FIIs to invest in IDRs subject to the
Foreign Exchange Management Act, 1999 (“FEMA”);
(b) electronic holding of IDRs; and
(c) issue of IDRs by custodians on behalf of issuers. |
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| June 9, 2009 | SEBI | SEBI Circular SEBI IMD/CIR No. 1/ 165935/2009 dated
June 9, 2009 |
Clarification for Mutual Funds for investing in IDRs | |||
| June 16, 2009 | SEBI | SEBI Circular SEBI/ CFD/DIL/IDR/1/2009/ 16/06 dated June 16, 2009 | Simplified Model Listing Agreement for Issuing Companies, whose securities market regulators are signatories to the Multilateral Memorandum of Understandings of International Organization of Securities commission | |||
| June 19, 2009 | SEBI | SEBI (Facilitation of Issuance of Indian Depository Receipts) (Amendment) Regulations, 2009 | • Permitting FIIs to invest in IDRs; • Enabling electronic holding of IDRs; and • Enabling issue of IDRs by Custodians on behalf of Issuing Company | |||
| July 22, 2009 | RBI | RBI Circular RBI/2009-
10/106 AP (DIR Series) Circular No. 05 dated July 22, 2009 |
• Prior approval required for banking/ finance companies having presence in India
• Clarity on procedure for repatriation of IDR proceeds
• One year lock-in on redemption of IDRs
• Permitting Investment by FIIs / NRIs in IDRs;
• Guideline for redemption/ conversion of IDRs. |
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| July 31, 2009 | SEBI | SEBI/CFD/DIL/DIP/37/ 2009/31/0 7 dated July 31, 2009 | • Pro rata allotment of IDRs
• Audited Financial Statements to be prepared in accordance with Indian GAAP or with the International Financial Reporting Standards or US GAAP, for a period of three (3) financial years immediately preceding the date of prospectus |
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| September 3, 2009 | SEBI | SEBI (ICDR) Regulations, 2009 | Replace the DIP guidelines in entirety | |||
| September 22, 2009 | SEBI | Approving proposal in its board meeting | Permitting issue of IDR’s to anchor investor | |||
| August 28, 2012 | RBI | RBI/2012-13/178 AP (DIR Series) Circular No. 19 | RBI allowed partial fungibility of Indian Depository Receipts (IDRs) – redemption or conversion of IDRs
into underlying equity shares – in a financial year to the extent of 25 per cent of the IDRs originally issued. |
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| March 01, 2013 | SEBI | SEBI Circular No. CIR/CFD/6/2013 | Broad Guidelines for fungibility of future IDR issuance and the existed listed IDRs. | |||
| March 31, 2014 | MCA | GSR 266 (E), dated 31-3-2014 | Companies (Registration of Foreign Companies) Rules, 2014 | |||
| April 1, 2014 | April 1, 2014 | Section 390 of the Companies Act, 2013 | Offer of Indian Depository Receipts | |||
| September 2, 2015 | SEBI | SEBI (Listing Oblication and Disclosure Requirements) Regulations, 2015 | Obligation of Listed Entity which has
listed its Indian Depository |
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