On October 10, 2019, the Securities and Exchange Board of India
("SEBI") issued a circular setting out an amended
framework for the issuance of Depository Receipts ("DRs")
by Indian companies (the "DR Circular").
Background
Since the Depository Receipts Scheme, 2014 (the "2014
Scheme") issued by the Ministry of Finance, Government of
India, became effective on December 15, 2014, issuances of
ADRs/GDRs had practically halted. Although the 2014 Scheme was more
liberal than the earlier regulations – for example, it
permitted unlisted Indian companies to issue DRs without the
requirement to obtain listing in India and also permitted
unsponsored programs – certain aspects such as the roles and
responsibilities of depositaries and custodians and certain tax
benefits with respect to DR issuers not listed in India were not
finalized. There were other concerns of the Indian government and
the SEBI, including preventing the DR mechanism from being used for
money laundering
