On 10 October 2019, IND SEBI published depository receipts issue framework.
- Only a company incorporated in India and listed on a recognized stock exchange may issue permissible securities (PS) for the purpose of issue of depository receipts (‘DRs’).
Listed Company Obligations
- Companies shall ensure that DRs are issued only with PS as the underlying.
- DRs shall be listed on any of the specified exchange of the permissible jurisdictions.
- Listed company will file with SEBI and the exchange, a copy of initial issue document.
- SEBI shall endeavor to forward its comments, to the exchange within 7 working days.
- Recognized exchanges shall take into consideration the comments of SEBI while granting in-principle approval to the company and decide on approval within 15 days.
- Any public disclosures made by the listed company on international exchange must also be filed with the recognized stock exchange as soon as possible within 24 hours.
- Permissible holder means a holder of DR, including its beneficial owner, who is not a person resident in India and who is not a non-resident Indian (NRI).
- The voting rights on permissible securities, if any, shall be exercised by the DR holder through the foreign depository pursuant to voting instruction only from such DR holder.
- The price of issue or transfer of permissible securities, for the issue of DRs by foreign depository, shall not be less than the price for the public offer domestic investors.
- Indian depositories shall develop a system to ensure aggregate holding of DR holders along with their holding, through offshore derivative instruments and holding as a FPI belonging to same investor group, shall not exceed the limit on foreign holding.
- Domestic custodian shall maintain records in respect of, and report to, Indian depositories all transactions about the issue and cancellation of DRs for monitoring.
- Indian depositories shall coordinate among themselves and with domestic custodians.
- The foreign depository shall not issue or pre-release the DRs unless the domestic custodian has confirmed the receipt of underlying permissible securities.
- Effective from 10 October 2019.