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Part - II

In addition to this, the companies must also have to comply with the eligibility criteria that SEBI has laid down. According to the criteria, the companies will be required to make the application at least 90 days ahead of the opening of the issue in the specified format along with a refundable fee of $10,000. On receiving the approval, an issue fee of 0.5%, subject to a minimum of Rs. 10 lakh, will hav to be paid for issues upto Rs. 100 cr. Where the issue size exceeds Rs. 100 cr, a fee of 0.25% will be payable on the exceeding amount.

The companies are required to get approval from the Ministry of Finance (MoF), SEBI and from the respective local authorities, such as the Securities and Exchange Commission (SEC), if it is USA.

The issuing company has to list on one or more stock exchanges having nationwide trading terminals, which means that the listing can only be done on BSE, NSE or both as they are the only terminals which provide nationwide trading services.

Regarding the repatriation of proceeds, the rules provide that the specific approval of the Ministry of Finance has to be sought.

Similar to the reporting requirement of an Indian company issuing ADRs/GDRs to overseas investors, the foreign companies issuing IDRs are also required to transfer the IDR proceed into a separate account and provide detail of the use of the IDR proceeds and their repatriation.

According to the norms, any person residing in India can purchase the IDRs. It includes individuals, companies and even Foreign Institutional Investors (FIIs). However, Foreign Venture Capital Investors (FVCIs) and Venture Capital funds (VCFs) would not be eligible to invest, as the current regulations governing them permit them to invest in IPOs of certain domestic companies. There will be domestic depository of the foreign company in India, which will distribute the dividends declared by the foreign company to the IDRs holders.

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* Contributed by -
Anand Dalmia & Aditya Khemnai,
PGDM - II Year,
IIM Lucknow.