To,
All Banks Authorised to Deal in Foreign Exchange
Madam/Sir,
Amendment to the 'Issue of Foreign Currency Convertible
Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993'
Attention of Authorised Dealer (AD) banks is invited to the
paragraph 2 of the Annex to the A.P.
(DIR Series) Circular No.5 dated August 1, 2005 regarding issue of Foreign
Currency Convertible Bonds (FCCB) and Regulations 4 and 5A of Schedule 1 to
Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to
time, for issue of American Depository Receipts (ADRs) / Global Depository Receipts
(GDRs).
2. In order to bring the ADR/GDR guidelines
in alignment with guidelines on domestic capital issues framed by the Securities
and Exchange Board of India (SEBI), the Government of India has brought about
certain changes to the guidelines on GDR/ADR guidelines by amending the Foreign
Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism)
Scheme, 1993.
3. A copy of the Press Note F.No.15/4/2004-NRI
dated August 31, 2005 issued by the Government of India, Ministry of Finance
and the Government Notification dated August 31, 2005 is annexed (Annex
1 and 2, respectively).
4. Necessary amendments to the Foreign Exchange
Management (Transfer or issue of Security by a Person Resident outside India)
are being issued separately.
5. Authorised Dealer banks may bring the
contents of this circular to the notice of their constituents and customers
concerned.
6. The directions contained in this circular
have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management
Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals,
if any, required under any other law.
Yours faithfully,
Vinay Baijal
Chief General Manager
Annex-1
[A.P. (DIR Series) Circular No. 11 dated September
5, 2005 ]
a) Eligibility of issuer: An Indian Company,
which is not eligible to raise funds from the Indian Capital Market including
a company which has been restrained from accessing the securities market by
the Securities and Exchange Board of India (SEBI) will not be eligible to
issue (i) Foreign Currency Convertible Bonds and (ii) Ordinary Shares through
Global Depositary Receipts under the Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993.
b) Eligibility of subscriber: Erstwhile Overseas
Corporate Bodies (OCBs) who are not eligible to invest in India through the
portfolio route and entities prohibited to buy, sell or deal in securities
by SEBI will not be eligible to subscribe to (i) Foreign Currency Convertible
Bonds and (ii) Ordinary Shares through Global Depositary Receipts under the
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993.
c) Pricing: The pricing of Global
Depositary Receipt and Foreign Currency Convertible Bond issues should be
made at a price not less than the higher of the following two averages:
(i)
The average of the weekly high and low of the closing prices of
the related shares quoted on the stock exchange during the six months
preceding the relevant date;
(ii) The
average of the weekly high and low of the closing prices of the
related shares quoted on a stock exchange during the two weeks preceding
the relevant date.
The "relevant date" means
the date thirty days prior to the date on which the meeting of the general
body of shareholders is held, in terms of section 81 (IA) of the Companies
Act, 1956, to consider the proposed issue.
d) Voting rights:
The voting rights shall be as per the provisions of the Companies Act, 1956
and in a manner in which restrictions on voting rights imposed on Global
Depositary Receipt issues shall be consistent with the Company Law provisions.
RBI regulations regarding voting rights in the case of banking companies
will continue to be applicable to all shareholders exercising voting rights.
Foreign Currency Convertible Bonds and Ordinary
Shares (Through Depositary Receipt Mechanism) (Amendment) Scheme, 2005.
G.S.R.No. 553(E), Central Government hereby
amend the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993, namely :-
1. This Scheme may be called the issue of
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) (Amendment) Scheme, 2005.
2. The Scheme shall be deemed to have come
into force from the date of publication of Notification; and
3. In the Foreign Currency Convertible Bonds
and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993;
After paragraph 3(1), the following sub-paragraph
shall be inserted; namely:-
3(1)(A). An Indian company, which is not eligible
to raise funds from the Indian capital market including a company which has
been restrained from accessing the securities market by the Securities and Exchange
Board of India (SEBI) will not be eligible to issue (i) Foreign Currency Convertible
Bonds and (ii) Ordinary Shares through Global Depositary Receipts under the
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism) Scheme, 1993.
3(1)(B). Unlisted Indian Companies issuing Global
Depositary Receipts/Foreign Currency Convertible Bonds shall be required to
simultaneously list in the Indian Stock Exchange(s).
3(1)(C) Erstwhile Overseas Corporate Bodies
(OCBs) who are not eligible to invest in India through the portfolio route and
entities prohibited to buy, sell or deal in securities by SEBI will not be eligible
to subscribe to (i) Foreign Currency Convertible Bonds and (ii) Ordinary Shares
through Global Depositary Receipts under the Foreign Currency Convertible Bonds
and Ordinary Shares(Through Depositary Receipt Mechanism) Scheme, 1993.
In Paragraph 5 sub-paragraph (4) (c) shall read
as follows :-
5(4) (ca) Listed Companies – The pricing should
not be less than the higher of the following two averages:
(i) The average of the weekly high and low
of the closing prices of the related shares quoted on the stock exchange during
the six months preceding the relevant date;
(ii) The average of the weekly high and low
of the closing prices of the related shares quoted on a stock exchange during
the two weeks preceding the relevant date.
The 'relevant date' means the date thirty days
prior to the date on which the meeting of the general body of shareholders is
held, in terms of section 81(lA) of the Companies Act, 1956, to consider the
proposed issue.
5(4) c(b) Unlisted Companies – The pricing should
be in accordance with Reserve Bank of India Regulations notified under Foreign
Exchange Management Act, 1999.
In Paragraph 5 (sub-paragraph (4) (e) (i) and
(4) (e) (ii) shall be inserted, namely :-
5(4)(e)(i) Listed Companies - The conversion
price of the Foreign Currency Convertible Bonds should be in accordance with
para 5(4)(ca) ibid.
5(4)(e)(ii) Unlisted Companies - The conversion
price of the Foreign Currency Convertible Bonds should be in accordance with
Reserve Bank of India Regulations notified under Foreign Exchange Management
Act, 1999.
(F.No.15/4/2004-NRI)
(U.K.SINHA)
JOINT SECRETARY TO THE GOVERNMENT OF INDIA
Foot Note :
(1). The Principal Scheme, viz., Issue of
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt
Mechanism Scheme, 1993), was published in the Gazette of India, Extraordinary,
Part II – Section 3 – Sub-section (i) on the 12th November 1993/Kartika 21,
1915). (Notification GSR No. 700 (E) dated 12th November, 1993).
(2) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme. 1999 was published in the Gazette of
India, Extraordinary, Part II – Section 3 – Sub-section (i) on the 11th November
1999/Kartika 20, 1921. (Notification GSR.No.764(E), dated 10th November 1999).
(3) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme. 1999 was published in the Gazette of
India, Extraordinary, Part II – Section 3 – Sub-section (i) on the 19th June
2000/Jyaistha 29, 1922. (Notification GSR.No.544(E), dated 16th June 2000).
(4) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme II, 2000 was published in the Gazette
of India, (Extraordinary), under Part II – Section 3 – Sub-section (i) on the
14th November, 2000 /Kartika 23, 1922. (Notification GSR.No.865 (E), dated 10th
November 2000).
(5) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme-III, 2000 was published in the Gazette
of India, (Extraordinary), under Part II – Section 3 – Sub-section (i) on 14th
November 2000/Kartika 23, 1922. (Notification GSR.No.866 (E), dated 10th November
2000).
(6) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme 2001 was published in the Gazette of India,
(Extraordinary), under Part II – Section 3 – Sub-section (i) on 21st September,
2001/Bhadra 30, 1923. (Notification GSR.No.687 (E), dated 18th September, 2001).
(7) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme, 2002 was published in the Gazette of
India, (Extraordinary), under Part II – Section 3 – Sub-section (i) on 13th
February 2002/Magha 24, 1923. (Notification GSR.No.100(E), dated 13th February
2002).
(8) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme-II, 2002 was published in the Gazette
of India, (Extraordinary), under Part II – Section 3 – Sub-section (i) on the
30th July 2002/Sravana 8, 1924. (Notification GSR.No.532(E), dated 29th July
2002).
(9) Amendment in the Original Scheme carried
in Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) (Amendment) Scheme III, 2002 was published in the Gazette
of India, (Extraordinary), under Part II – Section 3 – Sub-section (i) on 2nd
December 2002/Agrahayana 11,1924 (Notification GSR.No.789(E), dated 2nd December
2002).