Date: |
22-01-2015
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Notification No: |
RBI/2014-15/421 A.P. (DIR Series) Circular No. 61
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Issuing Authority: |
RBI
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Type: |
A.P.D.(Series) Circulars
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File No: |
RBI/2014-15/421 |
Subject: |
Depository Receipts Scheme
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RBI/2014-15/421
A.P. (DIR Series) Circular No. 61
January 22, 2015
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Depository Receipts Scheme
Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to
the Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident outside India) Regulations, 2000 (the Principal Regulations) notified
by the Reserve Bank vide
Notification No. FEMA. 20/2000-RB dated 3rd May 2000,
as amended from time to time.
- A new scheme called ‘Depository Receipts Scheme, 2014’ (DR Scheme, 2014)
for investments under ADR/GDR have been notified by the Central Government
effective from December 15, 2014 which provides for repeal of extant guidelines
for Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993 except to the extent relating to foreign
currency convertible bonds.
- The salient features of the new scheme are:
- The securities in which a person resident outside India is allowed to invest
under Schedule 1, 2, 2A, 3, 5 and 8 of Notification No. FEMA. 20/2000-RB dated
3rd May 2000 shall be eligible securities for issue of Depository Receipts in
terms of DR Scheme 2014;
- A person will be eligible to issue or transfer eligible securities to a foreign
depository for the purpose of issuance of depository receipts as provided in DR
Scheme 2014.
- The aggregate of eligible securities which may be issued or transferred to
foreign depositories, along with eligible securities already held by persons
resident outside India, shall not exceed the limit on foreign holding of such
eligible securities under the extant FEMA regulations, as amended from time to
time.
- The eligible securities shall not be issued to a foreign depository for the
purpose of issuing depository receipts at a price less than the price applicable
to a corresponding mode of issue of such securities to domestic investors under
FEMA, 1999.
- It is to be noted that if the issuance of the depository receipts adds to the
capital of a company, the issue of shares and utilisation of the proceeds shall
have to comply with the relevant conditions laid down in the Regulations framed
and Directions issued under FEMA, 1999.
- The domestic custodian shall report the issue/transfer of sponsored/unsponsored
depository receipts as per DR Scheme 2014 in ‘Form DRR’ as given in Annex within
30 days of close of the issue/ program.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Reserve Bank has since amended the Principal Regulations through the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) (Seventeenth Amendment) Regulations, 2014 notified vide
Notification No.
FEMA.330/2014-RB dated December 15, 2014, c.f. G.S.R. No. 914(E) dated December
24, 2014.
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully
(B.P. Kanungo)
Principal Chief General Manager
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