IDR listing norms may be eased to attract foreign firms

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Mumbai: Regulatory authorities are mulling changes in certain features of issuing Indian Depository Receipts (IDR) in order to make it more competitive in terms of costs and disclosures. As a result, foreign companies may soon find it more attractive to list their securities in the stock market here. IDRs, Indian equivalent of American and Global Depository Receipts (ADRs/GDRs), would allow foreign companies to raise funds from the local market directly. Sources said that SEBI is currently reviewing the feedback from companies interested in listing their IDRs in the country. The regulator will amend the existing rules by considering these feedbacks to make it more competitive for the issuers. The sources said the authorities are of a view that the feedback received so far was "hugely positive", but had also sought some more "tweaking" in the rules. The IDRs issue-related guidelines, which were instituted in 2004, had failed to attract foreign companies due to the norms not being competitive enough, says industry sources. The presence of foreign companies on Indian bourses at present are mostly through their subsidiaries operating in the country. The IDR rules were amended at the end of last year, where the minimum application value for the instrument was reduced to Rs 20,000 from Rs 2,00,000 earlier. At least 50 percent of the issue must be subscribed by institutional investors, or qualified institutional buyers (QIBs). Following the amendments, the limit for an overseas firm to raise money from India in a financial year was raised from 15 percent of its paid-up capital and free reserves to 25 percent of the post-issue equity capital. As per the norms, a foreign company seeking to raise funds via IDRs should have a continuous trading record on a stock exchange for at least three consecutive years.