Sebi wants same rights for holders of this instrument vis-a-vis other shareholders.
Companies issuing Indian Depository Receipts (IDR) will have to list the underlying equity shares in their home countries, the market regulator said today.
The issuers will also have to ensure equitable treatment is given to the IDR holders vis-à-vis other shareholders.
The Securities and Exchange Board of India put up the rules on its website today. It said the issuing company should have its registered office in a country whose securities market regulator is a signatory to the multilateral memorandum of understanding of the International Organisation of Securities Commissions (IOSCO).
Standard Chartered Bank is expected to become the first company to file for an IDR issue and had filed a “test application’ with the market regulator.
Last month, Sebi said there will be a separate quota for retail investors, besides anchor investors. The model listing agreement has allowed the IDR issuers to follow all provisions, especially corporate governance requirements and disclosure of periodic results, of their home country.
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The issuing company will have to notify the stock exchange at least seven working days in advance of the record date for corporate actions like rights, bonus, splits and payment of any dividend to IDR holders. The IDR issuer will also have to establish a process for setting a record date for any corporate action, to be disclosed in the offer document, and prior intimation provided to the stock exchange.
The company will have to allot IDRs offered to the public within 15 days of closure of the public issue. If it does not, it will have to pay interest at 15 per cent yearly.
Sebi said an issuer will have to have ‘in-principle’ approval for listing from the stock exchanges where IDRs are listed before issuing further IDRs.
The IDRs will not be eligible for listing if the documents haven’t gone to the stock exchange or if Sebi withdraws the observation letter at any time before the grant of permission for listing. The issuing company shall then have to refund the money it took from investors.
The company must also disclose the pre- and post-arrangement capital structure and shareholding pattern to the IDR holders if there is any corporate restructuring. The IDR issuer must tell the stock exchange of any change in the rights attaching to any class of equity shares into which the IDRs are exchangeable.
Sebi also said the issuing company will not exercise a lien on the fully-paid underlying shares against which the IDRs are issued. And that in respect of partly-paid underlying shares, against which the IDRs are issued, it will not exercise any lien except on money called or payable at a fixed time in respect of such shares.
IDR issuing companies will not forfeit unclaimed dividends before the claim becomes barred by law in the home country of the issuing company. Apart from this, IDR issuers will have to file with the stock exchange the pattern of IDR holders within 15 days of the end of each quarter.
Once listed, the issuing company will pay an initial listing fee to the exchange. And then, the annual listing payment on or before April 30 every year.
IDR issuing companies will have to pay half the security deposit in cash to the exchange, limited to Rs 3 crore.