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The Tax Publishers CLARIFICATION 6 Certain modifications in respect of EURO/ADR issues by companiesSource : Press Release, dt. 22-5-1998, issued by the Press Information Bureau. The government has made certain modifications in respect of Euro/ADR issues by the companies. This has been done on the basis of the periodic review of comprehensive guidelines for Euro issues which is done from time to time and assessment of the current situation. 1.Track record requirement : Considering the funding requirements of unlisted companies, it has been decided to permit all unlisted companies to float Euro/ADR issues provided they fulfil 3 years track record eligibility requirement. However, the current provisions for relaxing the 3 year track record requirement in the case of companies seeking issues to finance investments infrastructure industries such as power generation, telecommunications, petroleum, petroleum exploration and refining, ports, airports and roads will continue. These unlisted companies floating GDR/ADR/FCCB issues would, however, need to comply with the standard listing requirement of listing on the domestic stock exchanges within 3 years of having started making profit. At present, only listed companies are being permitted to issue GDRs/ADRs/FCCBs subject to the fulfilment of the track record requirement of good performance (financial or otherwise for a period of 3 years). The following modifications are also made specifically for ADR/GDR issues : 2.Validity : The guidelines issued on 19-6-1996 had provided that both the in principle and final approval will be valid for 90 days from the date of their respective issue. In partial modification, the 90 days validity period for final approval for GDRs and ADRs is being withdrawn. End uses : GDRs/ADRs are equity instruments and there is no repayment liability on the issuing company. Unlike a commercial borrowing or a foreign currency convertible bond which carries a repayment liability on the company, GDRs/ADRs are full risk equity. It has, therefore, been decided that all end-use restrictions on GDR/ADR issue proceeds be removed. The existing ban on investment of GDR/ADR issue proceeds in real estate and stock markets will, however, continue. These modifications shall come into effect for approvals granted on or after the date of issue of these guidelines. The Policy and Guidelines for Euro Issue will be subject to review periodically. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers
CLARIFICATION 6
Certain modifications in respect of EURO/ADR issues by companiesSource : Press Release, dt. 22-5-1998, issued by the Press Information Bureau.

The government has made certain modifications in respect of Euro/ADR issues by the companies. This has been done on the basis of the periodic review of comprehensive guidelines for Euro issues which is done from time to time and assessment of the current situation.

1.Track record requirement : Considering the funding requirements of unlisted companies, it has been decided to permit all unlisted companies to float Euro/ADR issues provided they fulfil 3 years track record eligibility requirement. However, the current provisions for relaxing the 3 year track record requirement in the case of companies seeking issues to finance investments infrastructure industries such as power generation, telecommunications, petroleum, petroleum exploration and refining, ports, airports and roads will continue.

These unlisted companies floating GDR/ADR/FCCB issues would, however, need to comply with the standard listing requirement of listing on the domestic stock exchanges within 3 years of having started making profit. At present, only listed companies are being permitted to issue GDRs/ADRs/FCCBs subject to the fulfilment of the track record requirement of good performance (financial or otherwise for a period of 3 years).

The following modifications are also made specifically for ADR/GDR issues :

2.Validity : The guidelines issued on 19-6-1996 had provided that both the in principle and final approval will be valid for 90 days from the date of their respective issue.

In partial modification, the 90 days validity period for final approval for GDRs and ADRs is being withdrawn.

End uses : GDRs/ADRs are equity instruments and there is no repayment liability on the issuing company. Unlike a commercial borrowing or a foreign currency convertible bond which carries a repayment liability on the company, GDRs/ADRs are full risk equity. It has, therefore, been decided that all end-use restrictions on GDR/ADR issue proceeds be removed.

The existing ban on investment of GDR/ADR issue proceeds in real estate and stock markets will, however, continue.

These modifications shall come into effect for approvals granted on or after the date of issue of these guidelines.

The Policy and Guidelines for Euro Issue will be subject to review periodically.