INDIA: Government amends rules to allow India IDR conversion into shares

Tuesday October 9 2012

The Government of India has amended the rules governing Indian Depository Receipts issued by India foreign companies, after financial regulators RBI and Sebi allowed part-conversion of securities into equity shares by investors in August.

The amendment, notified by the Ministry of Corporate Affairs (MCA) in the Companies (Issue of Indian Depository Receipts) Rules, came into effect from October 1.

As per the MCA notification, “A holder of IDRs may transfer the IDRs, may ask the domestic depository to redeem them or, any person may seek re-issuance of IDRs by conversion of underlying equity shares,” subject to the provisions of Foreign Exchange Management Act and Sebi rules at the time.

Banking regulator RBI and capital markets watchdog Sebi had approved partial conversion of IDRs into equity shares late in August, while capping the funds to be raised through IDRs at USD 5 billion.

The move is expected to help in attracting foreign entities to list their IDRs on domestic bourses.

Click on the above link for more details.