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Journalism of Courage
The meeting of senior functionaries of the department of company affairs and the Securities and Exchange Board of India on the issue of guidelines for Indian Depository Receipts (IDRs) remained inconclusive. Reserve Bank of India functionaries, who were expected, did not attend the meeting. The next meet on the issue is likely to be held after October 15.
According to senior government officials, DCA secretary Vinod Dhall has asked Sebi functionaries who were present at the meeting to consider the draft related to IDR guidelines prepared by DCA and come back with suggestions. ‘‘Sebi has to work on issues such as entry barriers, disclosures and prelisting requirements,’’ sources said.
IDRs are instruments in the form of a depository receipt or certificate created by domestic depository bank in India and issued to resident investors against the securities of issuing company which is making an issue of securities. Issue of IDRs are sought to be governed jointly by DCA and Sebi. As per the draft circulated, an issuing company shall file a prospectus or offer document in the form of schedule 11 to the Companies Act of 1956 with the Registrar of Companies before such an issue.
The prospectus will be vetted by Sebi before it is filed with RoC. No issuing company can issue IDRs unless it has complied with the provisions of section 603 and 605 of the Companies Act. These guidelines will apply to MNCs wanting to list on the Indian Stock Exchanges via the IDR route.
