Date:18/11/2005 URL: http://www.thehindubusinessline.com/2005/11/18/stories/2005111802631500.htm

Back Finance Ministry eases ADR, GDR pricing norms

Our Bureau

New Delhi , Nov. 17

COMPANIES going in for domestic offering of shares and a simultaneous or follow-on offering in the ADR/GDR would be exempt from the pricing guidelines for overseas offerings , provided the ADR/GDRs are priced at or above the domestic offer price.

To avail oneself of the exemption, the follow-on overseas offering has to be within 30 days of the domestic issue.

The Finance Ministry has said that companies going for such simultaneous or immediate follow on offering will have to take SEBI's approval and that the capital market regulator would specify the percentage to be offered in the domestic and ADR/GDR markets.

In its guidelines for GDRs/FCCBs issued in August, the Government had stipulated that the overseas offering should be made at a price not less than the higher of the following two averages - (i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date; (ii) The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date.

The `relevant date' would be the date 30 days prior to the date on which the meeting of the general body of shareholders is held, in terms of Section 81 (IA) of the Companies Act, 1956, for considering the proposed issue.

The pricing guidelines were part of a major revision of the guidelines on ADRs/GDRs/FCCBs whereby the Finance Ministry has made it mandatory for unlisted companies that have raised funds from such overseas offerings to list on the domestic stock exchanges within a stipulated time frame.

It had said that such listing would have to be done within three years of the issuance of GDRs/FCCBs or on making profit in any financial year starting from 2005-06, whichever is earlier.

It had been stipulated that unlisted companies that have not yet accessed the GDR/FCCB route for raising funds overseas would require a prior or simultaneous listing in the domestic market along with the overseas offering. Listed companies not eligible to raise funds from the domestic market had been barred from raising funds abroad.