Depository Receipts

A new beginning
Indian
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Contents
Introduction 04
Indian Depository Receipts 06
Eligibility Criteria 08
Other Conditions 09
Listing Procedure 10
Financial Statements Requirements 12
Continuing Obligation 15
How we can help? 16
Glossary 19
4 Indian Depository Receipts - A new beginning
Introduction
The world has become global village due to advancement in technology in recent years and
information can be shared very rapidly across the globe. As a result, the securities markets
have become international and it has become easier to trade on international markets. Also, a
lot of countries have opened their securities markets to foreign investors and abolished laws
restricting their citizens from investing abroad.
Companies that previously had to raise capital in the domestic market can now tap foreign
sources of capital. Indian companies have listed American Depository Receipts (ADRs),
Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs) in
overseas markets like New York, London, Luxembourg, Singapore etc. since 90s to raise
funds from international investors.
As the Indian securities markets have become deeper and with the BSE - Sensex and
NSE - Nifty giving higher returns as compared to other indices in the world, global companies
have started showing interest in the Indian capital markets. In keeping with Indias ongoing
popularity as a preferred investment destination among international investors and Indias
aspirations to become a fnancial hub in the South Asian region, the Government of India
has consistently introduced and modifed various instruments through which investments
can be made.
Now a new beginning has been made. The Government of India has introduced the concept
of Indian Depository Receipts (IDRs) to facilitate listing by foreign companies on Indian stock
exchanges. A foreign company can access Indian securities market for raising funds through
issue of IDRs.
A recent example is that of the global banking giant Standard Chartered Plc. which has raised
up to $1 billion (` 4,500 crore approximately) through IDRs. Further, foreign subsidiaries of
Indian companies can use IDR route for fund raising in India.
Major stock exchanges in India
Bombay Stock Exchange (BSE)
BSE is the oldest stock exchange in Asia established
in 1875.
BSE is ranked no.1 in terms of the number of listed
companies (over 4900).
It is the worlds 5th most active exchange in terms
of number of transactions handled through its
electronic trading system.
It is in the top ten of global exchanges in terms of the
market capitalization of its listed companies (as of
December 31, 2009).
BSE is the second stock exchange in the world to
obtain an ISO 9001: 2000 certifcation.
The BSE Index, SENSEX covers 30 companies.
National Stock Exchange (NSE)
NSE, established in April 1993, is the largest stock
exchange in India in terms of daily turnover and
number of trades, for both equities and derivative
trading,
Worldwide ranked no. 2 for number of single stock
futures contracts traded and no. 14 for market
capitalization (as of December 31, 2009).
Around 1450 companies listed on NSE.
Its index, S&P CNX Nifty is a well diversifed stock
index covering 50 companies.
Besides above there are 20 regional stock exchanges
in India.
A brief comparison of Indian indices with the other
indices is given on the next page.
(Source: www.bseindia.com, www.nseindia.com, www.world-exchanges.org)
PricewaterhouseCoopers 5
Comparison of the major stock exchanges in Asia based on
Market Capitalisation
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Indian indices Other indices
(Source: The World Federation of Exchanges (WFE) Market capitalization data as on December 2009. The WFE is association
of 52 regulated exchanges around the world.)
Broad equity market index performances among members of the World
Federation of Exchanges
Top 10 performing broad market indices in 2009, in local currency terms
Ranking Exchange % change 2009 / 2008
1 Colombo Stock Exchange 125.2%
2 Shenzhen Stock Exchange 117.1%
3 Buenos Aires Stock Exchange 103.6%
4 Lima Stock Exchange 101.0%
5 Istanbul Stock Exchange 96.6%
6 Bombay Stock Exchange 90.2%
7 National Stock Exchange India 88.6%
8 Indonesia Stock Exchange 87.0%
9 BM & FBOVESPA 82.7%
10 Shanghai Stock Exchange 80.0%
(Source: The World Federation of Exchanges 2009 Market Highlights. The WFE is association of 52 regulated exchanges
around the world.)
6 Indian Depository Receipts - A new beginning
Indian Depository Receipt
Indian Depository Receipt
An IDR is an instrument denominated in Indian Rupees (`) in the form of a depository receipt
created by a domestic depository (custodian of securities registered with the Securities and
Exchange Board of India) against the underlying equity of issuing company to enable foreign
companies to raise funds from the Indian securities markets.
In an IDR, foreign companies would issue shares, to a domestic (Indian) depository, which
would in turn issue depository receipts to investors in India. The actual shares underlying the
IDRs would be held by an Overseas Custodian, which shall authorize the Indian depository to
issue the IDRs. To that extent, IDRs are derivative instruments because they derive their value
from the underlying shares.
Legislation
The Government of India notifed the Companies (Issue of Indian Depository Receipts) Rules,
2004 {Companies IDR Rules}, amended till date, pursuant to Section 642 read with Section
605 A of the Companies Act, 1956 of India.
Securities and Exchange Board of India (SEBI) has issued guidelines with respect to issue of
IDRs within SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 {SEBI
ICDR Regulations} as amended till date and notifed the model listing agreement to be
entered between recognized Indian stock exchange and the issuing company specifying the
listing requirements of IDRs.
Further, the Reserve Bank of India (RBI) issued a circular in July 2009 to operationalise IDRs
from an exchange-control perspective.
Denomination
IDRs are issued by a domestic depository in India and denominated in `.
Listing
IDRs are listed on recognized stock exchanges in India.
Who can invest?
Following can invest, purchase, hold and transfer IDRs subject to relevant FEMA regulations:
Any person who is resident in India as defned under FEMA
SEBI registered Foreign Institutional Investors including their sub accounts
Non-Resident Indians (NRIs)
Intermediaries involved in issuance of IDR
Overseas Custodian is a banking company which is established in a country outside India
and has a place of business in India and acts as custodian for the equity shares of issuing
company against which IDRs are to be issued.
Domestic Depository is custodian of securities registered with SEBI and authorised by the
issuing company to issue IDRs.
Merchant Banker registered with SEBI, is responsible for due diligence and through whom
the draft prospectus for issuance of the IDR is fled with SEBI by the issuing company.
PricewaterhouseCoopers 7
Registrar and Transfer Agent provides services to the issuing company, the domestic
depository and the IDR holders in India primarily being registration and transfer of IDRs
in India. Examples of services include keeping records of the IDR holders, coordinating
corporate actions and handling investor grievances.
Approvals for issue of IDRs
IDR issues require SEBI approval and application can be made for this purpose 90 days
before the proposed issue opening date.
Fungibility
Fungibility (the ability to convert IDRs into underlying shares) is not automatically permitted
however; it can be converted to underlying shares of the issuing company after a one-year
mandatory lock-in period and subsequent to obtaining RBI approval.
In case of conversion, a listed company or mutual fund may continue to hold the underlying
shares; however, any other Indian investor would have to dispose of the underlying shares
within 30 days of conversion.
Corporate Action
On receipt of dividends and other corporate actions on the IDRs, the domestic depository
shall distribute them to the IDR holders as per deposit agreement.
Tax aspects
Presently, there are no specifc provisions under the Indian Income Tax Act for taxation of
IDRs. However any income earned by way of dividends, capital gains or otherwise, would be
subject to tax consequences on application of general provisions under the Indian Income
Tax Act and applicable Double Tax Avoidance Treaty (DTAA) entered into by the Government
of India with respective countries around the world, as the case may be.
Recently, the revised Direct Taxes Code (DTC) to replace the existing Indian Income Tax Act
has been tabled in the Lok Sabha, the lower house of the Indian Parliament. Hence, investors
are advised to consult their tax advisors about the particular tax consequences on account of
investment in IDRs.
Benefts to the key stakeholders
Issuing companies: Any foreign company listed in its home country and satisfying the
eligibility criteria can issue IDRs. A company which has signifcant business in India can
increase its value through IDRs by breaking down market segmentations, reaching trapped
pools of liquidity, achieving global benchmark valuation, accessing international shareholder
base and improving its brands presence through global visibility.
Investors: IDRs can lead to better portfolio management and diversifcation for investors by
giving them a chance to buy into the stocks of reputed companies abroad.
Employees: Foreign companies which do not have a listed subsidiary in India can give
employee stock options (ESOPs) to the employees of their Indian subsidiaries through the
IDR. This will enable the local employees to participate in the parent companies success.
Regulator: IDRs will lead to more liquid capital markets and a continuous improvement in
regulatory environment, thereby increasing transactional revenues for the regulator.
8 Indian Depository Receipts - A new beginning
Eligibility Criteria
As per Companies IDR Rules
As per Companies IDR Rules, as amended till date, the eligibility criteria to issue IDRs are
given as follows:
Criteria Requirements
Capital Pre-issue paid-up capital and free reserves are at least US$
50 million.
Market Capitalisation Minimum average market capitalization (during the last 3
years) in its parent country of at least US$ 100 million.
Operating history Continuous trading record or history on a stock exchange in
its parent country for at least 3 immediately preceding years.
Track record of distributable
profts
Track record of distributable profts in terms of section 205
of the Companies Act, 1956, for at least 3 out of immediately
preceding 5 years.
Other requirements Fulflls such other eligibility criteria as may be laid down by
SEBI from time to time in this behalf.
As per SEBI ICDR Regulations
As per SEBI ICDR Regulations, as amended till date, the following are additional requirements
for IDR issue:
Criteria Requirements
Additional requirements
for issue of IDRs
The issuing company is listed in its home country;
The issuing company is not prohibited to issue securities
by any regulatory body; and
The issuing company has track record of compliance with
securities market regulations in its home country.
The term home country means the country where the
issuing company is incorporated and listed.

PricewaterhouseCoopers 9
Other Conditions
Criteria Requirements
Issue size Issue size shall not be less than ` 50 crore.
Minimum application amount Minimum application amount shall be ` 20,000.
Extent of issue The number of underlying equity shares offered in a fnancial
year through IDR offerings shall not exceed 25 % of the post
issue number of equity shares of the company.
Allocation of the issue Minimum 50% of the issue should be allotted to Qualifed
Institutional Buyers* (QIBs) whereas 30% of the issue should
be offered to Retail Individual Investors* (RII) including
employees*.
Balance 20% to be apportioned between Non-institutional
investors* (NII) and Employees at the discretion of the issuer
company.
Under-subscription in any retail investor categories can be
adjusted against oversubscription in other categories except
QIB.
Limits of investment Retail Individual Investors - Minimum of ` 20,000 and
maximum of ` 100,000**.
Non-institutional investors - Above ` 100,000 and up to the
issue size.
Qualifed Institutional Buyer - Above ` 100,000 and up to the
issue size.
No single individual or single entity or group of entities in
India, other than QIBs, shall hold, directly or indirectly, IDRs
exceeding 5% of the Issue. No single QIB or a group of QIBs
shall hold IDRs exceeding 15% of the Issue.
Minimum subscription For non underwritten issues:
If the issuing company does not receive minimum
subscription of 90% or subscription level falls below 90%
after the closure, it shall refund the entire subscription
received.
For underwritten issues:
If the issuing company does not receive minimum
subscription of 90% within 60 days from the date of closure
of issue, it shall refund the entire subscription received.

* Refer Glossary for details.
** The SEBI Board in its meeting on October 25, 2010 decided that the maximum application size for retail individual
investors may be increased to ` 2,00,000 across all issues.
10 Indian Depository Receipts - A new beginning
Listing Procedure
Listing procedures as given in the Companies IDR rules, SEBI ICDR Regulations and Model
listing agreement are as follows:
As per Companies IDR Rules, no issuing company shall raise funds in India by issuing IDRs
unless permission has been obtained from SEBI. An application is to be made to the SEBI
at least 90 days prior to the opening date of the issue along with the relevant fees. The
SEBI, on receipt of an application, may call for such further information, and explanations,
as may be necessary.
The issuing company shall obtain the necessary approvals or exemption from the
appropriate authorities from the country of its incorporation under the relevant laws relating
to issue of capital, where required.
The issuing company shall appoint an overseas custodian bank, a domestic depository
and a merchant banker for the purpose of issue of IDRs. The issuing company shall deliver
the underlying equity shares or cause them to be delivered to an Overseas Custodian Bank
and the said bank shall authorize the domestic depository to issue IDRs.
The issuing company shall fle through a merchant banker or the domestic depository a
due diligence report with the Registrar of Companies, New Delhi (ROC) and with SEBI.
The issuing company shall, through a merchant banker fle a prospectus or letter of offer
certifed by two authorized signatories (one of whom shall be a whole-time director and
other the Chief Accounts Offcer), stating the particulars of the resolution of the Board by
which it was approved, with SEBI and ROC.
The Draft Red Herring Prospectus (DRHP) or draft letter of offer shall be fled with SEBI,
through the merchant banker, at least 21 days prior to the fling of fnal prospectus.
The prospectus shall be examined by the SEBI. Investors can read and review the draft
prospectus as it is a public document available on the SEBI website (www.sebi.gov.in).
If SEBI specifes any changes within 21 days, then the fnal prospectus shall not be fled
with the SEBI / ROC, unless such changes have been incorporated therein.
The issuing company shall obtain in-principle listing permission from one or more
recognized stock exchanges having nationwide trading terminals in India. The company
shall pay to stock exchange an initial listing fess as prescribed and maintain a security
deposit of 1% of the amount of IDR offered for subscription to the public. The company
shall submit the following documents to the stock exchange:
- A copy of a letter indicating the observation on the draft offer documents by SEBI
- A certifcate from a merchant banker acting as lead manager to the issue reporting
positive compliance by the issuing company of relevant SEBI regulations
- Agreement between issuing company, overseas custodian bank, domestic depository,
merchant banker and registrar & transfer agent
The issuing company may appoint underwriters registered with SEBI to underwrite the
issue of IDRs.
After SEBI gives its clearance, the company can set the issue dates and fle the Red
Herring Prospectus (RHP) with the ROC at least 3 days before the Bid / Issue Opening
Date and will become a prospectus upon fling with the ROC after the pricing date. The
issuing company shall issue an advertisement in one English national daily newspaper and
Hindi national daily newspaper with wide circulation for issue of IDR.
The issue will be kept open for a fxed number of days, and investors can submit their
application forms at the bidding centers. The investors will bid within the price band and
the fnal price will be decided post the closure of the Issue. Allotment of IDRs offered to the
public shall be made within 15 days of the closure of the public issue.
PricewaterhouseCoopers 11
Pre listing
Offering process
Listing on Stock
Exchange
Eligibility review
and public offering
Drafting a plan for IDR issue with necessary Board and
shareholder approval, as may be applicable
Formation of working group including auditors, legal counsel
Preparation of fnancial statements
Audit of fnancial statements
Appointment of merchant bankers, overseas custodian,
domestic depository and registrar & transfer agent
Due diligence by the merchant bankers
Drafting of offering circulars
Issue will be open for a fxed number of days
Investors to bid within the price band and fnal price to be
decided at the closure of issue
IDRs to be allocated to the investors
Application to SEBI for the purpose of listing IDRs along with the
draft red herring prospectus (along with due diligence report)
Approval by SEBI for prospectus
Submission of fnal prospectus to ROC.
Permission from the Stock Exchanges
Marketing of the issue
Key Procedures
Rights issue framework for IDRs
In order to facilitate simultaneous rights offering by the issuing companies (who have their
IDRs on Indian Stock Exchanges) in their home jurisdiction and in India, SEBI Board in its
meeting on 25th October 2010 has decided to notify the framework for rights issue of IDRs.
Further, it is decided that IDR issuers, who are in compliance with the continuous listing
requirements, can avail the facility of fling the offer document on fast track basis. Final
guidelines are awaited by SEBI on these matters.
Please note that above mentioned procedures are indicative, and not exhaustive. Refer Companies
IDR Rules, SEBI ICDR Regulations and Model listing agreement amended from time to time for
complete list of procedures.
12 Indian Depository Receipts - A new beginning
Financial Statements
Requirements
As per SEBI ICDR regulations, a prospectus for IDR issue shall contain all details
as specifed herein:
Criteria Requirements
The audited consolidated
or unconsolidated fnancial
statements
The audited consolidated or unconsolidated fnancial
statements of the foreign issuing company, as per
Indian GAAP or IFRS or US GAAP, for a period of 3
fnancial years immediately preceding the date of
prospectus containing the following:
Report of Auditors on the Financial Statements
Balance Sheets
Statements of Income
Schedules to Accounts
Statements of Changes in Stockholders Equity
Statements of Cash Flows
Statement of Accounting Policies
Notes to Financial Statements
Statement Relating to Subsidiary Companies (in
case of unconsolidated fnancial statements)
Related Party transactions
Liquidity and Capital Resources.
Reporting currency The fnancial information in the prospectus shall be
disclosed in the foreign issuing companys functional
currency / reporting currency / national currency and
the reporting currency shall be restricted to Sterling
Pound / Euro / Yen / US Dollar.
Audit requirement in case of
IFRS / US GAAP
In case, the fnancial results are prepared as per IFRS
or US GAAP, it shall be audited by a professional
accountant or certifed public accountant or equivalent
(by whatever name called in the home country as per
International Standards on Auditing (ISA)).
Audit report If the law of the home country requires annual statutory
audit of the accounts of the foreign issuing company, a
report of the statutory auditor for each of the 3 fnancial
years preceding the date of the prospectus.
If the law of the home country does not require annual
statutory audit, a report, as per Indian GAAP certifed
by Chartered Accountant in practice for each of the 3
fnancial years preceding the date of the prospectus.
The gap between date of opening of issue and date of
report shall not exceed 120 days.
PricewaterhouseCoopers 13
Criteria Requirements
Translation to INR (`) The report prepared by the statutory auditors of the
issuing company / Chartered Accountant should
be on the fnancial statements as prepared by the
management of the issuing company. Financial
statements shall be translated in Indian Rupees (at
the closing rate of exchange, as at the date on which
the fnancial information is presented), compiled
in a tabular form and include the consolidated or
unconsolidated income statement, consolidated or
unconsolidated cash fow statements, consolidated or
unconsolidated balance sheet and the capitalisation
statement as given below:
Particulars Pre-issue as Figures in ` Crores
Short-Term Debt XX
Long Term Debt XX
Shareholders Funds
Share Capital
Reserves
XX
XX
Total Shareholders Funds XX
Long Term Debt/Equity XX
Interim audited (consolidated
or unconsolidated) fnancial
statements
If the gap between the ending date of the latest
audited (consolidated or unconsolidated) fnancial
statements and the date of the opening of the issue is
more than 180 days then interim audited (consolidated
or unconsolidated) fnancial statements in respect of
the period ending on a date which is less than 180
days prior to the date of opening of the issue have to
be included in the report
If the gap is 180 days or less, then disclosures in
respect of material changes in the fnancial position
of foreign issuing company for such gap are disclosed
in prospectus.
However, in case of a foreign bank incorporated
outside India and which is regulated by a member of
the Bank for International Settlements or a member
of the International Organization of Securities
Commissions which is a signatory to a Multilateral
Memorandum of Understanding, fnancial statements
based on limited review report of statutory auditor
would suffce.
14 Indian Depository Receipts - A new beginning
Criteria Requirements
Reconciliation statement /
Summary of signifcant differences
In case the foreign issuing company opts to prepare
and disclose the fnancial results as per US GAAP, a
quantitative reconciliation statement vis-a-vis Indian
GAAP and narrative summary of signifcant differences
between the Indian GAAP and US GAAP has to be
annexed with the report. If fnancial results are prepared
as per IFRS, then narrative summary of signifcant
differences between Indian GAAP and IFRS need to
be annexed.
Subsidiaries and Associates of the
issuing Company
The following information for the last 3 years based on
the audited statements in respect of subsidiaries and
associates of the issuing company:
Date of Incorporation
Nature of activities
Equity Capital
Reserves (excluding revaluation reserve)
Sales
Proft after tax (PAT)
Earnings per share (EPS) and
Net Asset Value (NAV)
If the subsidiaries and associates are not required to
prepare audited statements as per the laws prevailing
in those countries, the same is to be certifed as
true and correct by the Board of Directors and the
management of such companies, provided a certifcate
from a certifed public accountant or equivalent
practicing in the concerned country is submitted to the
Board of Directors.
PricewaterhouseCoopers 15
Continuing Obligation
Companies whose IDRs are listed in India, are required to make timely and accurate
disclosure of material corporate information for regulatory and investor relations purposes on
a continuing basis:
Annual fnancial results
Submission of complete annual report to the Indian stock exchanges and SEBI including
audited fnancial statements, directors report and auditors report etc. in such manner
and format and within such time as required to be disclosed as per listing requirements of
home country.
Send complete annual report to each IDR holder at the same time when it is made
available to the shareholders as per the requirements of home country.
The issuing company shall comply with Indian GAAP or IFRS or US GAAP in preparation
and disclosure of fnancial results. The format of the disclosure of the fnancial statements
shall be as per disclosure requirements of the issuing company in the home country where
the issuing company is listed. If Indian GAAP is followed in preparation of fnancial results
then the format of disclosure of fnancial results shall be as prescribed by SEBI.
In case, the fnancial results are prepared as per IFRS or US GAAP, it shall be audited by
a professional accountant or certifed public accountant in accordance with International
Standards on Auditing (ISA). In case the issuing company opts to prepare and disclose
fnancial results as per Indian GAAP, it shall be audited by a Chartered Accountant in
accordance with the auditing and assurance standards issued by ICAI.
In case the issuing company opts to prepare and disclose the fnancial results as per US
GAAP, a quantitative reconciliation statement vis-a-vis Indian GAAP and narrative summary
of signifcant differences between Indian GAAP and US GAAP has to be annexed with the
report. If fnancial results are prepared as per IFRS, then narrative summary of signifcant
differences between Indian GAAP and IFRS need to be annexed.
Explanatory statement as to how audit qualifcations in respect of audited fnancial
statements of the previous accounting year have been addressed in the current year
fnancial results.
Disclosures of its fnancial information in its functional currency/reporting currency/national
currency and the reporting currency shall be restricted to Sterling Pound/Euro/Yen/US
Dollar.
The issuing company shall provide convenience translation into Indian Rupees (`) of the
latest years statements of consolidated profts and losses, assets and liabilities and cash
fows, at the closing rate of exchange, as at the date on which the fnancial information
is presented.
Publish annual results at least one English national daily and one Hindi national daily
newspaper in India.
Periodic fnancial results
The issuing company shall fle periodical audited fnancial results or un-audited fnancial
results subject to limited review by the Auditors, prepared in accordance with Indian GAAP
or IFRS or US GAAP with Indian stock exchanges in such manner and within such time and
as to the extent that it is required to fle as per the listing requirements of home country.
Please note that GAAP / Audit / disclosure requirements for periodic fnancial results are
same as given above for the annual results.
Publish periodical results at least one English national daily and one Hindi national daily
newspaper in India.
16 Indian Depository Receipts - A new beginning
Other key compliances / disclosures
Appointment of a company secretary as Compliance Offcer of the issuing company who
would liaise with the authorities such as SEBI, Stock Exchanges, ROC etc.
Corporate governance report as per requirements of home country and comparative
analysis with the corporate governance provisions applicable to Indian listed companies.
Declaration of dividend, right issue, issue of convertible debentures, bonus, split, options,
buy-back, delisting etc.
Increase in capital, reissue of forfeited shares, any alteration of capital and any other
information to enable IDR holders to appraise the issuing companys position.
Any change in board of directors, managing director, compliance offcer, auditors, registrar,
domestic depository and overseas custodian bank.
Copies of notices, resolutions and proceedings of Annual General Meeting and
Extraordinary General meeting of the issuing company.
Mergers, amalgamations, reconstruction, take-over, reduction of capital and any scheme/
arrangement involving the issuing company.
Send proxy forms to IDR holders so that voting rights can be exercised in accordance with
the deposit agreement.
Submission of IDR holding pattern statement to stock exchanges on quarterly basis
Inform material events having bearing on performance / operations of company and other
price sensitive information both at the time of occurrence of the event and cessation of the
event so as to enable the shareholders and public to appraise the position of the company.
Payment of annual listing fee / custodian fee etc.
Notes:
1. Note that above listing compliances are based on the Model listing Agreement (as issued
by SEBI in circular dated June 16, 2009) for listing of IDRs issued by the issuing companies
whose market regulator is signatory to Multilateral Memorandum of Understanding (MMOU) of
International Organisation of Securities Commission (IOSCO). For others, existing IDR listing
agreement would continue to apply which include additional requirements like adherence to
Indian corporate governance provisions, submission of Compliance certifcate etc.
2. The issuing company needs to notify the Indian stock exchanges at the same time it intimates
any of the abovementioned disclosure to the stock exchange where its equity shares are listed.
3. All correspondence should be in English language.
4. These compliances are indicative and not exhaustive. Refer Companies IDR Rules, SEBI ICDR
Regulations and relevant Model Listing Agreement amended from time to time for complete list
of compliances.
PricewaterhouseCoopers 17
How we can help?
At PricewaterhouseCoopers, we have created the Global Capital Markets Group (the
GCMG), a dedicated team of professionals who specialise in providing technical, strategic
and project management advisory services to companies interested in accessing the U.S.,
European or Indian capital markets and/ or applying IFRS / US GAAP / Indian GAAP while
converting the fnancials from local GAAP. We also assist companies in embedding these
accounting requirements into the fnancial reporting systems to enable companies to report
on a sustainable basis and provide training to management and accounting teams.
GCMG India has been serving Indian and foreign companies over the last 12 years in their
endeavour to access Indian and overseas capital markets and in applying IFRS / US GAAP
/ Indian GAAP with a global set-up, we combine our knowledge of local business practices
(including SEBI / Stock Exchange compliances) and draw upon expertise from our colleagues
around the world to suit an engagement. This gives us an unparalleled understanding of
the issues and solutions that will work for companies from any industry and with every
conceivable fnancial structure.
GCMG Worldwide MAP
CHICAGO
FRANCE
NORWAY
RUSSIA
KOREA
JAPAN
TAIWAN
HONG KONG
AUSTRALIA
SOUTH
AFRICA
CHINA
DENMARK
BELGIUM
ISRAEL
ITALY
INDIA
SINGAPORE
BRAZIL
SPAIN
SWITZERLAND
GERMANY
UNITED KINGDOM
NETHERLANDS
DALLAS
NEW YORK
MEXICO
CHILE
ARGENTINA
SAN FRANCISCO
18 Indian Depository Receipts - A new beginning
Our Services
As you deal with the challenges of managing your business during an offering, listing or
conversion project, we can team up with you to anticipate and resolve fnancial statement
requirements and regulatory process issues that could pose serious challenges to your
project or cause you to incur costly delays. Our services include:
Evaluation of IDR route as an alternative to raise capital;
Assistance in understanding key regulatory processes, issues and consequent tax
implications relating to capital market instruments (including IDRs);
Assisting organizations in meeting fnancial statements requirements to prepare them for a
listing or to raise capital (including IDRs);
Implementation support for IFRS/ US GAAP/Indian GAAP by way of technical advisory
on GAAP requirements and/or preparation of reconciliation and summary of GAAP
differences; and
Providing training in enhancing knowledge of IFRS/ US GAAP/Indian GAAP within
an organization.
Ongoing support for continuing obligations for companies whose IDRs are listed in India.
PricewaterhouseCoopers 19
Glossary
Companies IDR Rules The Companies (Issue of Indian Depository Receipts) Rules,
2004, as amended till date
Deposit agreement Agreement entered into between the issuing company and
domestic depository
Draft Red Herring Prospectus
(DRHP)
Draft red herring prospectus issued in accordance with the
Companies IDR Rules, SEBI ICDR Regulations, which does
not contain complete particulars on the price at which the
IDRs are offered
Employee Employee shall mean a person who,-
is a resident of India, and
is a permanent and full-time employee or a director,
whether whole time or part time, of the issuer or of the
holding company or subsidiary company or of the material
associate(s) of the issuer, whose fnancial statements are
consolidated with the issuers fnancial statements, working
in India and does not include promoters and an immediate
relative of the promoter (i.e. any spouse of that person,
or any parent, brother, sister or child of the person or of
the spouse
Foreign Institutional Investor (FII) Foreign Institutional Investor(s) as defned under the SEBI
(Foreign Institutional Investor) Regulations, 1995 registered
with the SEBI.
FEMA Foreign Exchange Management Act, 1999 as amended from
time to time
Home country The country where the issuing company is incorporated
and listed
GAAP Generally Accepted Accounting Principles
ICAI The Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards as issued by IASB
Income tax act The Income Tax Act, 1961 of India as amended from time
to time
Issuing Company A company incorporated outside India, making an issue of IDRs
through a domestic depository
Merchant Banker A merchant banker defned in clause (e) of Rule 2 of SEBI
(Merchant Bankers) Regulations, 1992, as amended from
time to time
20 Indian Depository Receipts - A new beginning
Mutual Fund A mutual fund registered with the SEBI under the SEBI
(Mutual Funds) Regulations, 1996, as amended from time
to time
Non Institutional Investor (NII) All Bidders that are not QIBs or Retail Individual Bidder(s) and
who have Bid for IDRs for an amount of more than ` 100,000.
Prospectus The prospectus to be fled with the ROC as per section 605
of the Companies Act and rule 5(2)(vi) of the Companies IDR
Rules, containing, inter alia, the Issue Price that is determined
at the end of the Book Building process, the size of the Issue
and certain other information
Qualifed Institutional Buyer
(QIB)
A Qualifed Institutional Buyer means a public fnancial
institution as defned in section 4A of the Indian Companies
Act, a scheduled commercial bank, a Mutual Fund, an FII
and sub-account registered with SEBI, other than a sub-
account which is a foreign corporate or foreign individual, a
multilateral and bilateral development fnancial institution, a
state industrial development corporation
Red Herring Prospectus (RHP) The red herring prospectus to be issued in accordance
with the applicable provisions of the Indian Companies Act
and the SEBI Regulations, which will not have complete
particulars of the price at which the IDRs are offered. The Red
Herring Prospectus will be fled with the ROC at least three
days before the Bid/Issue Opening Date and will become a
Prospectus upon fling with the ROC after the Pricing Date.
Retail Individual Investors (RII) Individual Investors (including HUFs applying through their
Karta and eligible NRIs) who have not bid for IDRs for an
amount of more than ` 100,000 in any of the bidding options.
ROC Registrar of Companies, New Delhi
SEBI Securities and Exchange Board of India
SEBI (ICDR)
Regulations
SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009 as amended till date
Notes
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused tax and advisory
services to build public trust and enhance value for our clients and their stakeholders.
More than 163,000 people in 151 countries across our network share their thinking,
experience and solutions to develop fresh perspectives and practical advice.
At PricewaterhouseCoopers (PwC), we push ourselves - and our clients - to think harder,
to understand the consequences of every action and to consider new perspectives. Our
goal is to deliver a distinctive experience to our clients and people around the world.
In India, PwC (www.pwc.com/India) offers a comprehensive portfolio of Advisory and
Tax & Regulatory services; each, in turn, presents a basket of fnely defned deliverables.
Complementing our depth of industry expertise and breadth of skills is our sound
knowledge of the local business environment in India. We are committed to working
with our clients in India and beyond to deliver the solutions that help them take on the
challenges of the ever-changing business environment.
PwC has offces in Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Delhi NCR,
Hyderabad, Kolkata, Mumbai and Pune.
pwc.com/india
Contact
To have a deeper discussion about IDRs, please contact:
Sanjay Hegde Arvind Daga
Phone: +91-9820062484 Phone: +91-9820608729
E-mail: sanjay.hegde@in.pwc.com E-mail: arvind.daga@in.pwc.com
Nitin Khullar
Phone: +91-9810072170
E-mail: nitin.khullar@in.pwc.com
2010 PricewaterhouseCoopers Pvt. Ltd. All rights reserved. PricewaterhouseCoopers, a registered trademark, refers to PricewaterhouseCoopers
Private Limited (a limited company in India) or, as the context requires, other member frms of PricewaterhouseCoopers International Limited, each of which
is a separate and independent legal entity. C
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