Global depository receipt

• Unlisted companies allowed to issue ADRs/ GDRs without the requirement of prior, simultaneous or subsequent listing on Indian stock exchanges;
• Relaxation for a limited period of two years only, as of now;
• Capital raised may be used for offshore purposes; else must be repatriated to India for domestic purposes, within 15 days.

The Ministry of Finance (“MoF”) through a press release dated September 27, 2013 (“Press Release”)1, has permitted unlisted Indian companies to list directly on offshore stock exchanges without prior or simultaneous or subsequent listing in India, which was not permitted earlier. This move comes in the backdrop of relatively weak domestic capital markets with very few successful Initial Public Offers (“IPOs”) of Indian companies in recent times and India’s increasing current account deficit. The MoF has permitted Indian unlisted companies to list their American depository receipts (“ADR”) global depository receipts (“GDR”) or foreign currency convertible bonds (“FCCB”) abroad on a pilot basis for two years without a listing requirement in India.

Consequent to the Press Release, the Central Government in its notification dated October 11, 2013 (“Notification”)2 amended the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 (“Scheme”). The Reserve Bank of India (“RBI”) has now followed this up with a circular dated November 8, 2013 (“Circular”)3 directing the authorized dealers towards the amendment to the Scheme.