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Journalism of Courage
The Securities and Exchange Board of India Sebi on Thursday formulated the initial disclosure requirements for foreign companies willing to issue Indian Depository Receipts IDRs. The suggested disclosure requirements have been placed for public comments on the Sebi website for 21 days, beginning today.
The conditions laid down by the market regulator for issuing IDRs entails: The company proposing to issue IDRs should not have been prohibited to issue securities by its applicable regulatory body. In addition, it should have a good track record with respect to compliance with securities market regulations.
On eligibility, Sebi said an IDR would be open only to investors, who can be classified as qualified institutional buyers QIBs as defined in the SEBI DIP Guidelines and to investors, who invest Rs 5,00,000 or more in such issues.
The minimum size of an IDR issue should not be less than Rs 50 crores, Sebi specified.
Sebi has also specified that if a company does not receive the minimum subscription of 90 per cent of the issued amount on the date of closure of the issue, or if the subscription level falls below 90 per cent after the closure of the issue on account of cheques 8212; being returned unpaid or withdrawal of applications 8212; the company would have to refund the entire subscription amount received.
With respect to the disclosure format, Sebi said that the offer document shall contain all material information, which shall be true and adequate so as to enable investors to make an informed decision with regard to investment.
A paragraph on forward looking statements must also be included in the offer document.
