SEBI asks foreign firms to issue IDRs on proportionate basis
01 Aug 2009
Foreign companies raising funds from Indian bourses through allotment of Indian Depository Receipts, should make it on a proportionate basis and not at the discretion of the issuer, the Securities and Exchange Board of India (SEBI) said in a release.
Market regulator SEBI has amended its earlier guidelines concerning general and disclosure requirements pertaining to IDR issues.
"Allotment to all these categories shall be made on proportionate basis only," SEBI said.
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, SEBI said.
Underwriting refers to the process that a large financial service provider like a bank or investment house undertakes 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.
Also, 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, SEBI added.
