MINISTRY
OF FINANCE
(Department
of Company Affairs)
G.S.R. 131
(E).-
In exercise of powers conferred by clause (a) of sub-section (1) of
section 642 read with section 605A of the Companies Act, 1956, the Central
Government hereby makes the following rules, namely :-
1.
Short Title and Commencement
.-
(i)
These Rules may be called the Companies (Issue of Indian Depository
Receipts) Rules, 2004.
(ii) They
shall come into force from the date of their notification in the Official
Gazette.
2.
Applicability .-
These rules shall apply only to those companies incorporated outside
India, whether they have or have not
established any place of business in India.
3.
Definitions .-
(i) (a)
"Chief Accounts Officer" means the chief accounts and financial officer
of a company, by whatever name known;
(b)
"Depository" means a depository as defined in clause (e) of sub-section (1) of section 2 of
Depositories Act, 1996;
(c)
"Domestic Depository" means custodian of securities registered with the
Securities and Exchange Board of India, hereinafter referred to as SEBI and
authorised by the issuing company to issue Indian Depository Receipts;
(d)
"Indian Depository Receipt" (hereinafter referred to as "IDR") means any
instrument in the form of a depository receipt created by Domestic Depository in
India against the underlying equity shares of issuing company;
(e)
"Issuing company" means a company incorporated outside India, making an
issue of IDRs through a domestic depository;
(f)
"Merchant Banker" means a Merchant Banker as defined in clause (e) of
Rule 2 of SEBI (Merchant Bankers) Rules, 1992;
(g)
"Overseas Custodian Bank" means a banking company which is established in
a country outside India and has a place of business in India and acts as custodian for the equity
shares of issuing company against which IDRs are proposed to be issued after
having obtained permission from Ministry of Finance for doing such business in
India;
(h)
"SEBI" means the Securities and Exchange Board of India established under
the Securities and Exchange Board of India Act, 1992.
(ii) The
words and expressions used herein and not defined, but defined in the Companies
Act, 1956 (1 of 1956), Income-tax Act, 1961 (43 of 1961), the Securities and Exchange Board of
India Act, 1992 (15 of 1992) or the
Depositories Act, 1996 (22 of 1996) or the Rules and Regulations framed
under these Acts, shall have the meaning respectively assigned to them in the
respective Acts.
4.
Eligibility for issue of IDRs
.-
Without prejudice to anything contained in the Securities and Exchange Board of India Act, 1992, an
issuing
company may issue IDRs only if it satisfies the following
conditions:-
(a) Its
pre-issue paid-up capital and free reserves are at least US$ 100 millions and it
has had an average turnover of US$ 500 million during the 3 financial years
preceding the issue.
(b) It
has been making profits for at least five years preceding the issue and has been
declaring dividend of not less than 10% each year for the said
period.
(c) Its
pre-issue debt equity ratio is not more than 2:1.
(d) It
shall fulfill the eligibility criteria laid down by SEBI from time to time in
this behalf.
5.
Procedure for making an issue of
IDRs .-
(i)
(a) No
issuing company shall raise funds in India by issuing IDRs unless it has
obtained prior permission from the SEBI.
(b) An
application seeking permission under clause (a) shall be made to the SEBI at
least 90 days prior to the opening date of the issue, in such form furnishing
such information as may be notified from time to time with a non-refundable fee
of US $10,000:
Provided
that, on permission being granted, an applicant
shall pay an issue fee of half a percent of the issue value subject to a minimum
of Rs.10 lakhs where the issue is upto Rs.100 crore in Indian rupees:
Provided
further where the issue value exceeds Rs.100 crore, every additional value of
issue shall be subject to a fee of 0.25 percent of the issue value.
(c) The SEBI may, on receipt of an
application, seeking permission under clause (a), call for such further
information, and explanations, as may be necessary, for disposal of such
application.
(d)
The issuing company shall obtain the necessary approvals or exemption
from the appropriate authorities from the country of its incorporation under the
relevant laws relating to issue of capital, where
required.
(e)
The issuing company shall appoint an overseas custodian bank, a domestic
depository and a merchant banker for the purpose of issue of
IDRs.
(f)
The issuing company shall deliver the underlying equity shares or cause
them to be delivered to an Overseas Custodian Bank and the said bank shall
authorize the domestic depository to issue IDRs.
(g)
The issuing company shall file through a merchant banker or the domestic
depository a due diligence report with the Registrar and with SEBI in the form
specified.
(ii) (a)
The issuing company shall, through a merchant Banker file a prospectus or
letter of offer certified by two authorized signatories of the issuing company,
one of whom shall be a whole-time director and other the Chief Accounts Officer,
stating the particulars of the resolution of the Board by which it was approved,
with the SEBI and Registrar of Companies, New Delhi, before such issue.
(b) The
draft prospectus or draft letter of offer shall be filed with SEBI, through the
merchant banker, at least 21 days prior to the filing under clause (a) .
Provided
that
if
within 21 days from the date of submission of draft prospectus or letter of
offer, SEBI specifies any changes to be made therein, the prospectus shall not
be filed with the SEBI/Registrar of Companies unless such changes have been
incorporated therein.
(iii) The issuing
company, seeking permission under sub-rule (i) above, shall obtain in-principle
listing permission from one or more stock exchanges having nation wide trading
terminals in India.
(iv) The issuing
company may appoint underwriters registered with SEBI to underwrite the issue of
IDRs.
6.
Other conditions for the issue of
IDRs.-
(i)
The repatriation of the proceeds of issue of IDRs shall be subject to
laws for the time being in force relating to export of foreign
exchange.
(ii) IDRs
shall not be redeemable into the underlying equity shares before the expiry of
one year period from the date of the issue of the IDRs.
(iii) IDRs issued
by any issuing company in any financial year shall not exceed 15 per cent of its
paid-up capital and free reserves.
(iv) Notwithstanding
the denomination of securities of an issuing company, the IDRs issued by it
shall be denominated in Indian Rupees.
7.
Registration of documents
.-
(i)
The Merchant Banker to the issue of IDRs shall deliver for registration
the following documents or information to the SEBI and Registrar of
Companies at New Delhi, namely:-
(a)
instrument constituting or defining the constitution of the issuing
company;
(b) the
enactments or provisions having the force of law by or under which the
incorporation of the issuing company was effected, a copy of such provisions
attested by an officer of the company be annexed;
(c) if
the issuing company has established place of business in India, address of its
principal office in India;
(d) if
the issuing company does not establish principal place of business in India, an
address in India where the said instrument, enactments or provision or copies
thereof are available for public inspection, and if these are not in English, a
translation thereof certified by a responsible officer of the issuing company
shall be kept for public inspection;
(e) a
certified copy of the certificate of incorporation of the issuing company in the
country in which it is incorporated;
(f) copies of
the agreements entered into between the issuing company, the overseas custodian
bank, the domestic depository, which shall inter alia specify the rights to be
passed on to the IDR holders;
(g) if
any document or any portion thereof required to be filed with the SEBI/
Registrar of Companies is not in
English language, a translation of that document or portion thereof in English,
certified by a responsible officer of the company to be correct and attested by
an authorised officer of the Embassy or Consulate of that country in India,
shall be attached to each copy of the document.
(ii) The
prospectus to be filed with the SEBI and Registrar under clause (ii) of rule 5
shall contain the particulars as prescribed in Schedule and shall be signed by
all the whole-time directors of the issuing company and by the Chief Accounts
Officer.
8.
Conditions for the issue of
prospectus and application .-
(i)
No application form for the securities of the issuing company shall be
issued unless the form is accompanied by a memorandum containing the salient
features of prospectus in the specified form.
(ii) An
application form can be issued without the memorandum as specified in clause (i)
above if it is issued in connection with an invitation to enter into an
underwriting agreement with respect to the IDRs.
(iii) The
prospectus for subscription of IDRs of the issuing company which includes a
statement purporting to be made by an expert shall not be circulated, issued or
distributed in India or abroad unless a statement that the expert has given his
written consent to the issue thereof and has not withdrawn such consent before
the delivery of a copy of the prospectus to the SEBI
and Registrar of Companies, New Delhi, appears on the
prospectus.
(iv) The
person(s) responsible for issue of the prospectus shall not incur any liability
by reason of any non-compliance with or contravention of any provision of this
rule, if-
(a) as
regards any matter not disclosed, he proves that he had no knowledge thereof;
or
(b) the
contravention arose in respect of such matters which in the opinion of the
Central Government were not material.
9.
Listing of Indian Depository
Receipt .-
The IDRs issued under this Rule shall be listed on the recognized Stock
Exchange(s) in India as specified in clause (iii) of rule 5 and such IDRs may be
purchased, possessed and freely transferred by a person resident in India as
defined in section 2(v) of Foreign Exchange Management Act, 1999, subject to the
provisions of the said Act.
10. Procedure for transfer and redemption
.-
(i)
A resident holder of IDRs may transfer the IDRs or may ask the Domestic Depository to redeem these
IDRs, subject to the provisions of the Foreign Exchange Management Act, 1999 and
other laws for the time being in force.
(ii) In
case of redemption, Domestic Depository shall request the Overseas Custodian
Bank to get the corresponding underlying equity shares released in favour of the
Indian resident for being sold directly on behalf of Indian resident, or being
transferred in the books of issuing company in the name of Indian resident and a
copy of such request shall be sent to the issuing company for
information.
(iii) A holder of IDRs may, at any time, nominate
a person to whom his IDRs shall vest in the event of his death and Form No: 1
annexed to these rules may be used for this
purpose.
11. Continuous Disclosure
Requirements.-
(i)
The Issuing company shall furnish to the Overseas
Custodian
Bank and Domestic Depository, a certificate obtained by it from the statutory
auditor of the company or a Chartered Accountant about utilization of funds and
its variation from the projections of utilization of funds made in the
prospectus, if any, in quarterly intervals and shall also publish it or cause to
be published in one of the English language newspapers having wide circulation
in India.
(ii)
The
quarterly audited financial results should be prepared and published in
newspapers in the manner specified by the listing conditions.
12. Distribution of corporate benefits
.-
On the receipt of dividend or other corporate action on the IDRs as
specified in the agreements between the issuing company and the Domestic
Depository, the Domestic Depository shall distribute them to the IDR holders in
proportion to their holdings of IDRs.
13. Penalty .-
If a company or any other person contravenes any provision of these rules
for which no punishment is provided in the Act, the company and every officer of
the company who is in default or such other person shall be punishable with the
fine which may extend to twice the amount of the IDR issue and where the
contravention is a continuing one, with a further fine which may extend to five
thousand rupees for every day, during which the contravention
continues.
14. Repeal and savings
.-
On the commencement of these rules, all rules, orders or directions in
force in relation to any matter for which provisions are made in these rules
shall stand repealed, except as respects things done or omitted to be done
before such repeal.
15. Power of Central Government to decide
certain Questions .-
If any question arises on the applicability and interpretation, such
question shall be decided by the Central Government.
SCHEDULE
Matters to be
specified in the Prospectus
(1) General
information
(i)
Name and address of the registered office of the
company;
(ii) name
and address of the Domestic Depository, the Overseas Custodian Bank with the
address of its office in India, the Merchant Banker, the underwriter to the
issue and any other intermediary which may be appointed in connection with the
issue of IDRs;
(iii) names and
addresses of Stock Exchanges where applications are made or proposed to be made
for listing of the IDRs;
(iv) provisions
relating to punishment for fictitious applications;
(v)
statement/declaration for refund of excess
subscription;
(vi) declaration
about issue of allotment letters/certificates/ IDRs within the stipulated
period;
(vii)
date of opening of issue;
(viii)
date of closing of issue;
(ix)
date of earliest closing of the issue;
(x)
declaration by the Merchant Banker with regard to adequacy of resources
of underwriters to discharge their respective obligations, in case of being
required to do so;
(xi) a statement
by the issuing company that all moneys received out of issue of IDRs shall be
transferred to a separate domestic bank account, name and address of the bank
and the nature and number of the account to which the amount shall be
credited;
(xii) the details of
proposed utilisation of the proceeds of the IDR issue.
(2) Capital Structure of the
Company
Authorised,
issued, subscribed and paid-up capital of the issuing
company.
(3) Terms of the
issue
(i)
Rights of the IDR holders against the underlying
securities;
(ii)
details of availability of prospectus and forms, i.e., date, time, place
etc;
(iii) amount and
mode of payment seeking issue of IDRs; and
(iv) any special
tax benefits for the issuing company and holders of IDRs in
India.
(4) Particulars of
Issue
(i)
Objects of the issue;
(ii) cost
of the Project, if any; and
(iii) means of
financing the projects, if any including contribution by
promoters.
(5) Company, Management and
Project
(i)
Main object, history and present business of the
company;
(ii)
promoters and their background;
(iii)
subsidiaries of the company, if any;
(iv) particulars
of the Management / Board (i.e. Name and complete address(es) of Directors,
Manager, Managing Director or other principal officers of the
company);
(v)
location of the project, if any;
(vi) details of
plant and machinery, infrastructure facilities, technology etc., where
applicable;
(vii) schedule of
implementation of project and progress made so far, if
applicable;
(viii)
nature of product(s), consumer(s), industrial
users;
(ix)
particulars of legal, financial and other defaults, if
any;
(x) risk
factors to the issue as perceived; and
(xi) consent of
Merchant Bankers, overseas custodian bank, the domestic depository and all other
intermediaries associated with the issue of IDRs.
(6) Report
(i)
Report of the statutory auditor on the financial results and financial
status of the company up to a period not being more than 120 days before the
opening of the issue, wherever statutory audit is required under the law of the
country in which the issuing company is incorporated;
(ii) A
report by domestic depository, as certified by an Accountant who is member of
Institute of Chartered Accountants of India holding certificate of practice,
upon profits or losses of the issuing company for each of the five financial
years immediately preceding the issue of prospectus and upon the assets and
liabilities of the issuing company at the last date to which the accounts of the
company were made in the specified form; provided that the gap between date of
issue and date of report shall not be more than 120 days; and
iii)
If the proceeds of the IDR issue are used for investing in other
body(ies) corporate, then following details of such body(ies) corporate shall be
given :
a)
Name and address(es) of the bodies corporate;
b)
The reports stated in clause (a) above in respect of those bodies
corporate also.
(7) Other
Information
i)
Minimum subscription for the issue.
ii)
Fees and expenses payable to the intermediaries involved in the issue of
IDRs.
(8) Inspection of Documents
Place
at which inspection of the offer documents, the financial statements and
auditor's report thereof will be allowed during the normal business
hours.
(9) Any other information as specified by SEBI
from time to time.
"Form No.
1
(see rule 10(iii))
NOMINATION
FORM
(to be filled
in by individual(s) applying singly or jointly)
I/We
____________________________________ and ________________________ and
____________________ the holders of
IDRs bearing number(s) ____________
________________________________
of M/s _________________________________ wish to make a nomination and do hereby
nominate the following person(s) in whom all rights of transfer and/or amount
payable in respect of IDRs shall vest in the event of my or our
death.
Name(s) and
address(es) of nominee(s)
Name:
_________________________________
Address:
_________________________________
_________________________________
_________________________________
Date
of Birth* __________________________________
*( to
be furnished in case the nominee is a minor)
** The
nominee is a minor whose guardian is ___________________________(name and
address)
______________________________________________________________________________________________________________________________________________________________________________________________________________________________
(** To
be deleted if not applicable)
Signature:
_______________________
Name
:________________________
Address
:_________________________
__________________________
Date:
-----
Signature:
_______________________
Name
:________________________
Address
:_________________________
__________________________
Date
-------
Signature:
_______________________
Name
:________________________
Address
:_________________________
__________________________
Date
-------
Address, Name
and Signature of witnesses:
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Name
and Address |
Signature
with date |
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1. |
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2. |
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INSTRUCTIONS:
1.
The nomination can be made by individuals only applying/holding IDRs on
their own behalf singly or jointly. Non-individual including society, trust,
body corporate, partnership firm, Karta of Hindu Undivided Family, holder of
power of attorney cannot nominate. If the IDRs are held jointly, all joint holders will sign the
nomination form. Space is provided as a specimen, if there are more joint
holders more sheets can be added for signatures of holders of IDRs and witness.
2.
A minor can be nominated by a holder of IDRs and in that event the name
and address of the guardian shall be given by the holder.
3.
The nominee shall not be a trust, society, body corporate, partnership
firm, Karta of Hindu Undivided Family or a power of attorney holder. A
non-resident Indian can be a nominee on re-patriable basis.
4.
Nomination stand rescinded upon transfer of IDRs.
5.
Transfer of IDRs in favour of a nominee shall be a valid discharge by a
company against the legal heir.
6.
The intimation regarding nomination or Nomination Form shall be filed in
duplicate with Domestic Depository who will return one copy thereof to the
holder of IDRs. The Domestic Depository will send a copy of the Nomination Form to the Issuing
Company.
F.No.1/2/2001-C.L.-V
Jitesh
Khosla; Joint Secretary