Redemption of Indian Depository Receipts (IDRs) into Underlying Equity Shares

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..... to Underlying Equity Shares 1. In order to facilitate foreign issuers to raise funds from the Indian capital markets through IDRs and enable investors in the domestic market to have investment opportunities in the securities of major multi-national companies listed on welldeveloped markets, a legal framework was created by the Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI) and S .....

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..... aining RBI approval on a case-by-case basis. Further, two-way fungibility (the ability to purchase existing Shares on the London Stock Exchange and/or the Hong Kong Stock Exchange and deposit them into the IDR programme) is not currently permitted. Additionally, in terms of the RBI Circular, at the time of redemption/conversion of IDRs into underlying shares, the Indian holders (persons resident i .....

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..... s is not permitted. Period of redemption:- IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from the date of issue of IDRs." Regulation 100 of Chapter X of SEBI (ICDR) Regulations, 2009:- "IDRs shall not be automatically fungible into underlying equity shares of issuing company." 5. The extant regulatory frame work does not permit fungibility .....

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..... half yearly basis ending on June and December of every year. c. When the IDRs are considered "infrequently traded" on the above basis, it shall be the trigger event for redemption. d. The issuer company shall make a public announcement in an English and Hindi language newspaper with wide circulation in the prescribed format (including brief details about the trigger of the redemption event, t .....

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..... anges within seven days of completion of the process of redemption. 7. All intermediaries are directed to comply with the instructions contained in this circular. 8. This circular shall be applicable with immediate effect. 9. This circular is issued in exercise of the powers conferred under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992. 10. This circu .....

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