Unlisted Indian Companies Permitted To Sponsor Adrs/Gdrs

The Ministry of Finance ("MOF") has by a recent notification further liberalized the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism), 1993 ("Scheme") by permitting unlisted Indian companies, like those engaged in real estate business, to sponsor an issue of American Depository Receipts (ADRs)/ Global Depository Receipts (GDRs) with an overseas depository against shares held by its shareholders. Prior to the amended Scheme, only listed companies were eligible to sponsor an issue of ADRs/GDRs.

Where one or a group of investors obligate themselves to subscribe to the entire offer, leaving no likelihood of the issue being under-subscribed, would result in a Sponsored issue.