SEBI details disclosure norms for rights IDRs

23 Sep 2011

Companies offering Indian Depository Receipts (IDRs) through rights issue have to file offer documents as per the existing guidelines, market regulator SEBI said today.

SEBI today notified amendments to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, by adding a chapter relating to rights issue of IDRs.

"Every listed issuer offering IDRs through a rights issue shall prepare the offer document in accordance with the home country requirements along with an addendum containing disclosures as specified in Part A of Schedule XXI and regulation 106F and file the same with the Board and the stock exchanges on which the IDRs of the issuer are listed," the SEBI circular said.

In case the issuing company is in breach of the IDR listing agreement then it cannot come out with a rights offering, SEBI said.

A company issuing rights IDRs should inform the stock exchange where it already has an IDR listed. The IDRs issued by way of rights would also have to be listed on one of those stock exchanges in the country.

For getting listed, however, an issuer should ensure that the company had no disagreement with the stock exchange on the provisions of deposit agreements and listing agreements for at least three years. Nor should there be any pending show-cause notices or prosecution proceedings.

IDRs are instruments through which a foreign company raises capital in the country by offering underlying shares to domestic investors.

So far, only Standard Chartered has come out with an IDR issue in the country.