Redemption of Indian Depository Receipts (IDRs) into Underlying Equity Shares

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....major multi-national companies listed on welldeveloped markets, a legal framework was created by the Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI) and SEBI. 2. Pursuant to the same, Standard Chartered PLC came out with its IDR issue in May 2010 and the said IDRs have been listed on BSE and NSE on June 11, 2010. In terms of disclosures in their offer document on "ability to withdraw shares" from the IDR Facility and to deposit further shares into the IDR Facility, it has been stated as under:- "Pursuant to the terms of the RBI Circular, IDRs are not redeemable into underlying equity shares before the expiry of a one-year period from the date of issue of the IDRs. The SEBI Regulations and the RBI Circular state that a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Period of redemption:- IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from the date of issue of IDRs." Regulation 100 of Chapter X of SEBI (ICDR) Regulations, 2009:- "IDRs shall not be automatically fungible into underlying equity shares of issuing company." 5. The extant regulatory frame work does not permit fungibility but only redemption. Therefore, allowing redemption freely in the absence of two way fungibility could result in reduction of number of IDRs listed, thereby impacting its liquidity in the domestic market. 6. In view of the above, it has been decided, in consultation with the RBI, that: a. After the completion of one year from the date....