Para 3 - Eligibility for issue of convertible bonds or ordinary shares of issuing company - Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993

Eligibility for issue of convertible bonds or ordinary shares of issuing company. 3. (1) An issuing company desirous of raising foreign funds by issuing Foreign Currency Convertible Bonds or ordinary shares for equity issues through Global Depositary Receipt is required to obtain prior permission of the Department of Economic Affairs, Ministry of Finance, Government of India. [(i) An Indian Company may sponsor an issue of ADRs/GDRs with an overseas depository against shares held by its shareholders at a price to be determined by the Lead Manager, in respect of :— (a) Divestment by shareholders of their holdings of Indian companies listed in India. (b) Divestment by shareholders of their holdings of Indian companies not listed in India but which are listed overseas. (ii) Such a facility would be available pari passu to all categories of shareholders of the company whose shares are being sold in the ADR/GDR market overseas. (iii) An approved intermediary under the scheme, would be an Investment Banker registered with the Securities and Ex change Commission in the USA, or under Financial Services Author ity in U.K., or the appropriate regulatory authority in Germany, France, Singapore or in Japan. (iv) Such issues would need to conform to the Foreign Direct Investment Policy and other mandatory statutory requirements and detailed guidelines issued in this regard. The provisions of paragraph (4B) of Schedule I to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 as notified by Reserve Bank of Indiavide Notification No. FEMA 41/2001-RB, dated March 2, 2001, would also need to be adhered to.] (2) An issuing company seeking permission under sub-paragraph (1) shall have a consistent track record of good performance (finan cial or otherwise) for a minimum period of three years, on the basis of which an approval for finalising the issue structure would be issued to the company by the Department of Economic Affairs, Ministry of Finance. (3) On the completion or finalisation of issue structure in consultation with the Lead Manager to the issue, the issuing company shall obtain the final approval for proceeding ahead with the issue from the Department of Economic Affairs. Explanation .—For the purposes of sub-paragraphs (2) and (3) "issue structure" means any of the requirements which are provid ed in paragraphs 5 and 6 of this Scheme. (4) The Foreign Currency Convertible Bonds shall be denominated in any convertible foreign currency and the ordinary shares of an issuing company shall be denominated in Indian rupees. (5) When an issuing company issues ordinary shares or bonds under this Scheme, that company shall deliver the ordinary shares or bonds to a Domestic Custodian Bank who will, in terms of agree ment, instruct the Overseas Depositary Bank to issue Global Depositary Receipt or Certificate to non-resident investors against the shares or bonds held by the Domestic Custodian Bank. (6) A Global Depositary Receipt may be issued in the negotiable form and may be listed on any international stock exchanges for trading outside India. (7) The provisions of any law relating to issue of capital by an Indian company shall apply in relation to the issue of Foreign Currency Convertible Bonds or the ordinary shares of an issuing company and the issuing company shall obtain the necessary per mission or exemption from the appropriate authority under the relevant law relating to issue of capital.