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Gdrs & Fccbs

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Contents Global Depository Receipts 2 Introduction 2 What is an American Depository Receipt? 3 Mechanism 3 Types of ADRs/GDRs 5 1. Unsponsored ADRs/GDRs: 5 2. Sponsored DRs: 5 Why ADRs and GDRs? 6 To the Investors 6 To the Issuers 6 FCCB-Foreign Currency Convertible Bonds 7 Introduction 7 Explanation 7 Features of FCCB 8 Mexhanism/Regulations 8 Criteria for issuing FCCBs 8 Raising of funds through FCCB 9 What happens if FCCBs do not convert? 11 Taxation 11 Pricing norms for FCCBs 12 FCCB issue by the Indian Companies need to conform to various regulatory requirements 12 Role of SEBI – Pre-issue and Post-issue requirements & Conditions to be fulfilled by the Issuer Company: 13 …show more content…

Types of ADRs/GDRs
ADRs can be classified into two broad categories: 1. Unsponsored ADRs/GDRs: In such DRs, the company (RIL in our case) has got no agreement with the custodian or depository bank for the issuance of DRs. These are traded on the over-the-counter (OTC) market and are issued according to the market demand forces.
Unsponsored DRs can be issued by a no. of depository banks. Each depository services only the DRs issued by it.

2. Sponsored DRs: These are the DRs which are sponsored by the company itself. In this case, the foreign company itself wants to issue DRs and it does so by designating a depository bank that will issue DRs in the foreign market on its behalf. It is of the following types:

a) Level 1 Sponsored DRs: These are the lowest level of sponsored DRs. These are traded only on the OTC market. In case of ADRs, the company is supposed to adhere to minimal US Securities and Exchange Commission (SEC) requirements and is not required to publish reports in accordance to US GAAP standards.

b) Level 2 Sponsored DRs: In level 2 DRs, the DRs are listed on a recognized stock exchange and can be traded thereafter. The stock exchanges in which these DRs are usually traded are New York Stock Exchange (NYSE), NASDAQ, the American

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