The Centre today issued a notification permitting two-way fungibility between American depositary receipts (ADR) or global depository receipts (GDR) and their underlying shares in the domestic market, subject to certain conditions.
According to the notification, ADRs and GDRs which have already been converted to shares in the domestic market are only eligible for re-conversion.
The government had announced the fungibility proposal in its Union budget last year.
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The domestic custodian will maintain details of the ADRs and GDRs issued, cancelled, sold or re-converted. It will also co-ordinate with the company or the National Securities Depository Ltd to ensure that the sectoral percentage cap on foreign investment is not breached.
The government also said the current income-tax provisions applicable to non-resident investments in ADRs/GDRs offered against an issue of fresh underlying shares will also extend to investment in ADRs and GDRs against existing shares.
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