Zee News July 31, 2009 Allot IDRs On Proportionate Basis
Allot IDRs on proportionate basis: SEBI
31 Jul 2009, 2215 hrs IST, PTI
MUMBAI: Market regulator SEBI today said that the allotment of Indian Depository Receipts, a
tool used by foreign companies to raise funds from Indian bourses, should be made on
proportionate basis and not at the discretion of the issuer.
"Allotment to all these categories shall be made on proportionate basis only," SEBI said,
amending its guidelines concerning general and disclosure requirements pertaining to IDR
The market regulator further said that in case of underwritten issues, if the issuing company does
not receive the minimum subscription of 90 per cent of the net offer, from the date of closure of
the issue, the issuing company shall forthwith refund the entire subscription amount received.
Underwriting refers to the process that a large financial service provider like a bank or
investment house underatkes to assess the eligibility of a customer to receive their financial
products and in case the product is not bought, the financial service provider takes them.
Commenting on it, SMC Capitals Equity Head Jagannadham Thunuguntla said, "It is a right
step for creating a good IDR market in India. It will help in smooth execution of IDRs."
SEBI further said that the audited financial statements should be prepared in accordance with
Indian GAAP, or with the International Financial Reporting Standards (IFRS) or US GAAP, for
a period of three financial years immediately preceding the date of prospectus.
The report prepared by the statutory auditors of the issuing company should disclose financial
statements in Indian rupees, while the issuing company would do it in Sterling Pound, Euro, Yen
or US Dollar.