New GDR norms will hit unlisted firms: Ficci

Federation of Indian Chambers of Commerce and Industry (Ficci) has called for changes in the norms for issuing Global Depository Receipts and American Deposit Receipts.

While welcoming the decision to align the norms with Securities & Exchange Board of India's rule on domestic issues, the chamber has said the recent changes do not do justice to companies not listed in India.

In a letter to Finance Minister P Chidambaram, Ficci President Onkar S Kanwar has pointed out that the move will have negative implications for companies not listed with the Indian Stock Exchange as they will be barred from raising capital abroad.

"Indian companies trying to enter sectors where 100 per cent FDI is allowed will be at a great disadvantage. Further, the amendment will hamper development in critical sectors like exploration and production where Indian markets do not have any experience of funding in the initial phase," Kanwar said.

The chamber also asked for a provision to exempt unlisted companies which have gone far ahead in seeking approval for issuing GDR as per earlier guidelines.

While he welcomed the decision to force Indian companies listed with the stock exchanges to issue GDRs and Foreign Currency Convertible Bonds at the same price as the one on the Indian Stock Exchange, Kanwar added that the amendment would not do justice to unlisted companies which have got approvals from requisite authorities, passed resolution in the AGM and are in the process of pre marketing.

The chamber suggested that as in the case when preferential shares guidelines were revised, companies which undertook the process within three months of the notification should be permitted to complete the process as per earlier guidelines.