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Our Bureau

New Delhi , Aug. 31

THE Finance Ministry has made it mandatory for unlisted companies that have raised funds from the overseas markets through the Global Domestic Receipts (GDRs) or Foreign Currency Convertible Bonds (FCCBs) route to list on the domestic stock exchanges within a stipulated time frame.

The listing would have to be done within three years of the issuance of GDRs/FCCBs or on making profit in any financial year starting from 2005-06, whichever is earlier.

This is part of the revised guidelines on GDRs/ADRs/FCCBs announced by the Finance Ministry here today.

The main objective behind the move to amend the existing guidelines on GDRs/ADRs/FCCBs is to align them with the Securities and Exchange Board of India's (SEBI) guidelines on domestic capital issues.

For unlisted companies that have not yet accessed the GDR/FCCB route for raising funds overseas, the Finance Ministry has said that such companies would require prior or simultaneous listing in the domestic market while seeking to issue FCCBs/GDRs.

As regards the listed companies, the amended guidelines now stipulate that an Indian company that is not eligible to raise funds from the domestic capital market, including those restrained by SEBI, would not be eligible to issue GDR /FCCBs.

On the issue of voting rights in the listed companies, the revised guidelines state that these rights would be as per the provisions of the Companies Act 1956 and in a manner in which restrictions on voting rights imposed on GDR issues shall be consistent with the company law provisions.

The Finance Ministry has also said that the Reserve Bank of India (RBI) regulations regarding voting rights in the case of banking companies would continue to be applicable to all shareholders exercising voting rights.

Further, the guidelines also stipulate that the Overseas Corporate Bodies that are not eligible to invest in India through the portfolio route and entities prohibited to buy, sell or deal in securities by SEBI would also not be eligible to subscribe to the FCCBs/GDRs issued by Indian listed companies.

As regards pricing of GDRs/FCCBs, the revised guidelines stipulate that the issues should be made at a price not less than the higher of the following two averages - (i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date; (ii) The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.

The `relevant date' would be the date 30 days prior to the date on which the meeting of the general body of shareholders is held, in terms of section 81 (IA) of the Companies Act, 1956, for considering the proposed issue.

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