The Tax Publishers

CLARIFICATION 9

Permission for sale/transfer of underlying shares obtained after conversion of GDRs/ADRsSource : Press release : 1998-99/297, dt. 9-9-1998, issued by the Press Relations Division, RBI.

1. It has now been decided to grant general permission for sale/transfer of underlying shares obtained after conversion of Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) by persons not resident in India if the sale is proposed to be made through a stock exchange or when the underlying shares are being sold in terms of an offer made under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. All other cases of sale of shares underlying the GDRs/ADRs will have to be referred to the Reserve Bank of India for necessary permission.

2. The scheme for issue of ordinary shares through depository receipt mechanism provides that the holders of the GDRs/ADRs may ask the overseas depository to redeem the GDRs/ADRs. The overseas depository then requests the domestic custodian bank to get the corresponding underlying shares released in favour of the non-resident investor for being sold in India. The non-resident holder, so far, had to approach the Reserve Bank of India for necessary permission under Foreign Exchange Regulation Act, 1973, for sale of the shares, It was pointed out by several investors that there was a risk that markets may move against the sellers during the time needed for obtaining necessary RBI approval for sale.

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com