TaxTMI 
TaxTMI 
Introduction of new Chapter VIA in the SEBI (DIP) Guidelines, 2000
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....ed in the SEBI DIP Guidelines, 2000, containing the guidelines to be followed by an IDR issuer for coming out with such issue. A copy of Chapter VIA is enclosed herewith in the Annexure. 3. This circular is being issued in exercise of powers conferred by Sections 11(1) and 11A of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 4. These amendments shall come into force from the date of the circular. This circular, along with the annexure, is available on SEBI website at www.sebi.gov.in. The entire text of SEBI (DIP) Guidelines, 2000, including the amendments issued vide this circular, is also available on SEBI website under the category "Issues and Listing". Yours faithfully, Parag Basu Annexure CHAPTER VIA OF THE SEBI (DIP) GUIDELINES, 2000 ISSUE OF INDIAN DEPOSITORY RECEIPTS (IDRs) PART I - GENERAL REQUIREMENTS 6A.1 PRELIMINARY The guidelines given in this chapter are in addition to the provisions of the Companies (Issue of Indian Depository Receipts) Rules,....
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....t Banker has the option to file the draft prospectus as a public filing or a confidential filing. In both the cases, the initial fee as prescribed in Rule 5 (i) (b) of the IDR Rules shall accompany such filing. 2. The contents of the prospectus including the financial statements of the issuer company, its subsidiaries and associates shall be in plain English. "Associate" for the purpose of this chapter would mean "associate" as defined in Indian GAAP or IFRS or US GAAP in which the financial statements of the issuer are disclosed. 3. The prospectus shall contain all material information which shall be true and adequate so as to enable the investors to make informed decision on the investments in the issue. 4. The prospectus shall also contain the information and statements specified herein 5. 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 or the Chief Fi....
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....ian Bank with the address of its office in India, the Merchant Banker, the Underwriter to the issue, Advisors to the issue and any other intermediary which may be appointed in connection with the issue of IDRs; 4. Interest of Experts and Counsel 5. Name, address and contact information of the compliance officer in relation to the issue of IDRs. The compliance officer should be placed in India 6. Name, address and contact information of Stock Exchanges where applications are made or proposed to be made for listing of the IDRs; 7. Disclosure about provisions relating to punishment for fictitious applications; 8. Statement/declaration for refund of excess subscription 9. Statement that an interest of 15% p.a. would be paid to the investors if the allotments letters / refund orders are not despatched within 30 days of the closure of the public issue 10. Decla....
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....of their materiality. 4. Materiality shall be decided taking the following factors into account: a. Some events may not be material individually but may be found material collectively. b. Some events may have material impact qualitatively instead of quantitatively. c. Some events may not be material at present but may be having material impacts in future. 5. The Risk factors shall appear in the prospectus in the following manner: a. Risks envisaged by Management. b. Proposals, if any, to address the risks. c. Any 'notes' required to be given prominence shall appear immediately after the Risk factors. 6A.12 RECENT DEVELOPMENTS Important events in the recent past (2 FY preceding the issue) providing details of important developments on 3 key areas: Operations & Management, Shareholding patterns and Business Environment 6A.13 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE SHARES IN THE DOMESTIC MARKET OF THE ISSUER 1.  ....
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.... Rates for the last five years 3. High, Low, Average Rates for the last twelve months 6A.16 FOREIGN INVESTMENT AND EXCHANGE CONTROLS OF THE COUNTRY OF INCORPORATION/ WHERE SHARES ARE LISTED Information relating to the relevant foreign investment laws and exchange control regulations of the Country of Incorporation or country where the underlying equity shares are listed. 6A.17 OBJECTS OF THE ISSUE / USE OF PROCEEDS The following shall be disclosed: 1. purpose of the issue; 2. break-up of the cost of project for which the money is raised through the IDR issue; 3. the means of financing such project; and 4. proposed deployment status of the proceeds at each stage of the project. 6A.18 CAPITALISATION STATEMENT Pre-issue as (Figures in Rs.crores) Short-Term Debt Long Term Debt Shareholders Funds ­ Share Capita....
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.... in the specified form; provided that the gap between date of issue and date of report shall not be more than 120 days 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; a. The above report needs to be stated in Indian Rupees in addition to home country currency and shall be prepared either in Indian GAAP (including all Accounting Standards issued by the Institute of Chartered Accountants of India) or with the International Financial Reporting Standards (IFRS) [including the International Accounting Standards (IAS)] or US GAAP, with a reconciliation statement vis-à-vis Indian GAAP. If the same is prepared according to IFRS or US GAAP, a paragraph on summary of significant differences between Indian GAAP and IFRS or Indian GAAP and US GAAP, as the case may be, shall also be incorporated. b. Further, in case the report is prepared as per IFRS or US GAAP, the annual and quarterly financial results shall be audited by a professional accountant or certified public accountan....
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....ll be given. 2. Overview of the business of the issuer company. 3. Factors that may affect Results of the Operations. 4. An analysis of reasons for the changes in significant items of income and expenditure shall also be given, inter alia, containing the following: a. unusual or infrequent events or transaction; b. significant economic changes that materially affected or (are likely to effect income from continuing operations; c. known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations; d. future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known; e. the extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices; f. total turnover of each maj....
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....; Reserves (excluding revaluation reserve); 5. Sales; 6. Profit after tax (PAT); 7. Earnings per share (EPS); and 8. Net Asset Value (NAV); If the subsidiaries and associates are not required to prepare such audited statements as per the laws prevailing in those countries, the same may be certified as true and correct by the Board of Directors and the management of such companies, provided a certificate from a certified public accountant or equivalent practicing in the concerned country is submitted to SEBI. 6A.26 MANAGEMENT 1. Controlling shareholders and their Background 2. Details of the Board of Directors and the Key Managerial Personnel (i.e. Name, address(es) of Directors, Manager, Managing Director or other principal officers of the company, age, qualification, industry experience, other directorships) 3. Remuneration of the Directors and the Key managerial personnel with detailed breakup, sitting fees, their relation with promoters / controlling shareho....
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....nbsp; Conversion procedure of IDRs into shares 7. Governing Law regarding various aspects of IDRs and transactions therein. 6A.29 PROVISIONS REGARDING TRANSFER OF SHARES AND DEPOSITORY RECEIPTS 1. Provisions regarding transfer of IDRs 2. Outline of provisions regarding transfer of underlying shares after conversion 6A.30 INFORMATION RELATING TO THE DEPOSITARY - INDIAN & INTERNATIONAL Brief details of the Domestic Depositary, Overseas Custodian Bank and Depositary Agreement. 6A.31 APPROVALS OF THE GOVERNMENT/REGULATORY AUTHORITIES Information relating to statutory and regulatory approvals required in home country for the Issue and the related aspects and their status, and approvals from Indian Regulatory authorities. 6A.32 TAXATION FRAMEWORK IN INDIA AND THE COUNTRY OF INCORPORATION / WHERE SHARES ARE LISTED Information relating to relevant provisions of Taxation law, Tax Treaties and their impact for IDR holders. 6A.33 OUTSTANDING LITIGATIONS AND DEFAULTS 1. Material litigation / liabilities/defaults including arrears / potential liabilities of the issuer, its promoters / controlling sharehold....
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....cribe for additional capital will be exercised. 6A.35 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION / MAIN CHARTER OF THE ISSUER 6A.36 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION Place at which inspection of the documents specified under Rule 6 of the Companies (Issue of Indian Depository Receipts) Rules, 2004, the prospectus, the financial statements and auditor's report thereof will be allowed during the normal business hours. 6A.37 OTHER INFORMATION 1. Disclosure of mandatory vetting of the prospectus by the legal counsel to the Issuer operating at the place where the registered office of the Issuer is situated. 2. Consent of Merchant Bankers, overseas custodian bank, the domestic depository and all other intermediaries associated with the issue of IDRs. 3. Fees and expenses payable to the intermediaries involved in the issue of IDRs PART III: APPLICABILITY OF THE PROVISIONS OF THE SEBI (DIP) GUIDELINES, 2000 Except Chapter VI, all other chapters of the SEBI (DIP) Guidelines, 2000 would apply to an issue of Indian Depository Receipts (IDRs) to the exten....
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....osed to be made for listing of the IDRs; 5.7 Disclosure about provisions relating to punishment for fictitious applications; 5.8 Statement/declaration for refund of excess subscription 5.9 Statement that an interest of 15% p.a. would be paid to the investors if the allotments letters / refund orders are not despatched within 15/30 days of the closure of the public issue, as the case may be 5.10 declaration about issue of allotment letters/certificates/ IDRs within the stipulated period; 5.11 date of opening of issue; 5.12 date of closing of issue; 5.13 Method and Expected Timetable of the issue 5.14 a statement that subscription to the issue shall be kept open for....
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....tions for applicants 8.1 How to Apply, Availability of Prospectus, Abridged Prospectus and Application Forms, Mode of Payment and Book building procedure, if relevant. 8.2 In the application form, the declaration relating to Nationality and Residentship shall be shown prominently as under: "Nationality and Residentship (Tick whichever is applicable) i. I am / We are Indian National(s) resident in India and I am/we are not applying for the said equity shares as nominee(s) of any person resident outside India or Foreign National(s). ii. I am / We are Indian National(s) resident in India and I am / We are applying for the said equity shares as Power of Attorney holder(s) of Non- Resident Indian(s) mentioned below on non-repatriation basis. iii. I am / We are Indian National(s) resident outside India and I am/we are applying for the said equity shares on my / our own behalf on non-repatriation basis." 8.3 The application form should contain necessary instructions/ provisions for the following: i. ....
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.... main objects and present business of the company. 11.2 Promoters / controlling shareholders and their background. 11.3 Names, address and occupation of manager, managing director, and other Directors (including nominee-directors and whole-time directors) giving their directorships in other companies. 11.4 Location of the project 11.5 Plant and machinery, technology, process, etc 11.6 Collaboration, any performance guarantee or assistance in marketing by the collaborators 11.7 Infrastructure facilities for raw materials and utilities like water, electricity, etc. 11.8 Schedule of implementation of the project and progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, trial production, date of commercial production etc 11.9 Nature of the products/services and end users 11.10 Existing, licensed and installed capacity of the product, demand of the product-existing, and estimated in the coming years as estimates by a Government authority or by any other reliable institution, giving source of the information. In case the comp....
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....capital); 13.2 P/E pre-issue 13.3 Average return on net worth in the last three years 13.4 Minimum return on increased net worth required to maintain pre-issue EPS; 13.5 Net Asset Value per share based on last balance sheet; 13.6 Net Asset Value per share after issue and comparison thereof with the issue price. 13.7 Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group (i.e., companies of comparable size in the same industry. (Indicate the source from which industry average and accounting ratios of the peer group has been taken) Provided that the projected earnings shall not be used as a justification for the issue price in the prospectus. Provided further that the accounting ratios disclosed in the prospectus in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption th....