Depository receipts are instruments issued by international depositories(ODB), and they represent an interest in the underlying shares held by them in the issuer company(Indian company). The shares are usually held by a domestic custodian on behalf of the depositories and the depositories in turn issue the depository receipts, which entitle the holder of the receipts to get the underlying shares on demand.
Indian companies are allowed to raise equity capital in the international market through the issue of GDR/ADRs/FCCBs. These are not subject to any ceilings on investment. An applicant company seeking Government's approval in this regard should have a consistent track record for good performance (financial or otherwise) for a minimum period of 3 years
Issue of GDRs/ADRs by IT software /services companies
Eligible to offer to non residents/resident permanent employees including overseas working directors against the issue of ordinary shares.
Atleast 80% of its turnover is from software related activities.
Annual export earning of 100 crore from such company.
The shares issued against ADR/ GDR ahould be treated as direct foreign investment in the issuing company.
It can not exceed more than 51% of the subscribed capital.