The Reserve Bank of India on Sunday said Indian company may sponsor American or Global Depository Receipts (adr/gdr) with an overseas depository against shares held by its shareholders at price to be determined by lead manager.The companies would have to comply with provisions of foreign currency convertible bonds and ordinary shares (through depository receipt mechanism) scheme, 1993 and central government guidelines while sponsoring adr\gdrs, the Reserve Bank of India said in a notification to authorised foreign exchange dealers.The entities would have to comply with guidelines issued in July for using proceeds of adr\gdrs, including utilisation in the first stage acquisition of shares in the disinvestment process and the mandatory second stage public offer for strategic reasons, it said. Such divestment in the overseas markets would be allowed through mechanism of sponsored adr/gdr issue for listed corporates, it said adding, proceeds of issue should be repatriated into India within a period of one month of its closure. Such adr/gdr issues would also come under the purview of Sebi takeover code if they are cancelled and underlying shares are to be registered with the company as shareholders. This divestment would be reckoned as FDI and would require fipb and other applicable nods.Divestment could be initiated by entities whose shares are being offered for divestment in foreign markets by sponsoring adr/gdr issues against the block of existing shares offered by shareholders under provisions of the norms. The RBI said the sponsoring company would have to give an option to all shareholders indicating amount of shares to be divested and inform them of the price determination mechanism.
