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Sponsored ADRs/ GDRs - Receipt of Dis-investment Proceeds
A.P.
(DIR Series) Circular No. 75 dated 3rd February 2003
Attention
of authorised dealers is invited to A.P. (DIR Series) Circular No. 52 dated
November 23, 2002 and Notification No. FEMA 41/2001-RB dated March 3, 2001, in
terms of which Indian companies are permitted to sponsor an issue of American
Depository Receipts/ Global Depository Receipts (ADRs/ GDRs) with an overseas
depository against the shares held by its shareholders subject to compliance
with the provisions of the issue of Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and the
Operative Guidelines notified by the Government of India.
2.
As a measure of further liberalisation and in order to encourage Indian
companies to list ADRs/ GDRs on the overseas exchanges, through the scheme of
sponsored ADRs/ GDRs, it has been decided to permit resident shareholders of
Indian companies, who offer their shares for conversion to ADRs/ GDRs, to
receive the sale proceeds in foreign currency. However, the conversion to such
ADRs/ GDRs should have the approval of Foreign Investment Promotion Board (FIPB).
Further, the sale proceeds, so received by residents, are also permitted
to be credited to their Exchange Earners� Foreign Currency/ Resident Foreign
Currency (Domestic) [EEFC/ RFC (D)] accounts or to their Rupee accounts in India
at their option.
3.
Disinvestments proceeds under the scheme, receivable by residents, who
have since became non-residents, would also be eligible for credit to their
foreign currency accounts abroad or any of their accounts in India at their
option.
4.
The above facility will be available until further notice.
5.
Necessary amendments to the Foreign Exchange Management Regulations, 2000
are being issued separately.
6.
Authorised Dealers may bring the contents of the circular to the notice
of their constituents concerned.
7.
The directions contained in this circular have been issued under Section
10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of
1999).
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