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Notification No. FEMA.330/2014-RB dated December 15, 2014 Depository Receipts Scheme
This circular brings out the salient features of the new ‘Depository Receipts Scheme, 2014’ (DR Scheme, 2014) for investments under ADR/GDR which has come into effect from December 15, 2014. With the coming into effect of this new DR Scheme 2014 the present guidelines for Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993, except to the extent relating to foreign currency convertible bonds, stand repealed.
The following amendments have been made in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000, (Notification No. FEMA 20/2000-RB, dated 3rd May, 2000): –
1. Two new definitions ((iicc) & (iidd)) have been introduced in Regulation 2.
2. Regulation 13 has been substituted.
3. Schedule 1 has been amended.
4. A new Schedule 10 has been introduced.
The salient features of the new DR Scheme 2014 are as under: –
1. Securities in which a person resident outside India is allowed to invest under Schedule 1, 2, 2A, 3, 5 and 8 of Notification No. FEMA. 20/2000-RB dated 3rd May 2000 will be the eligible securities for issue of Depository Receipts in terms of DR Scheme 2014.
2. A person will be eligible to issue or transfer eligible securities to a foreign depository for the purpose of issuance of depository receipts as provided in DR Scheme 2014.
3. The aggregate of eligible securities which can be issued or transferred to foreign depositories, along with eligible securities already held by persons resident outside India, cannot exceed the limit on foreign holding of such eligible securities under FEMA.
4. Eeligible securities cannot be issued to a foreign depository for the purpose of issuing depository receipts at a price less than the price applicable to a corresponding mode of issue of such securities to domestic investors.
5. If the issuance of the depository receipts adds to the capital of a company, the issue of shares and utilisation of the proceeds will have to comply with the relevant conditions laid down in the Regulations framed and Directions issued under FEMA.
6. The domestic custodian will report the issue/transfer of sponsored/unsponsored depository receipts as per DR Scheme 2014 in ‘Form DRR’ as Annexxed to this circular within 30 days of close of the issue/program.
