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Issue of GDR,sIDEs by IT Software Services Companies
Indian companies engaged in information technology software and information technology services (IT software/services) are eligible to offer their non-resident/resident' permanent employees (including Indian and overseas working didirectorsGORslADRs against the issue of ordinary shares, subject to the operational guidelines/conditions issued from time
Issue Structure of the GDR sANDERs
GORILLA OR may be issued for one or more underlying shares or bonds held with the domestic custodian bank (DCB). GOR~/FCCBs may e denominated in any freely convertible foreign’ currency. The ordinary shares underlying the GOR~ and the shares issued upon conversion of the FCCBs should be denominated only in Indian currency. The following issues would be decided by
for Issue of.Convertible Bonds or Ordinary Shares of Issuing Company
company desirous of raising funds by issuing FCCBs or ordinary shares for equity issues GDR ADR is required to Obtain the prior permission’ of the Department of Economic Ministry of Finance, Government of India. It may sponsor an issue of ADRS GDRS.o; with n depository against shares held by its shareholders, at a price .dfl mined b
EURO ISSUES
a part of glOBalising the Indian economy after 1991, Indian corporates are now permitted to their securities in, and raise funds from, the euro markets, TLie two long-term primary instruc of Euro issues are Foreign Currency Bonds (FCCBs) and Global Depository Receipts (GDRs) n Depository Receipts (ADRs), A FCCB means a bond subscribed by a non-resident fn currency arid convertible into ordina
Refinancing Existing Foreign Currency loan
Refinancing of outstanding amounts under existing loans by raising fresh loans at. lower costs is permitted on a case-to-case basis. subject o the condition that the outstanding maturity of the original loan is maintained. Rolling over of the ECB is not permitted. Similarly, a corporate borrowing overseas for financing its rippee related expenditure and swapping i
Pre-Payment of ECBs
The stipulations relating to prepayments of ECBs, currently in force, are as follows: (a) Repayment facility upto 100 per cent of outstanding balance is ‘permitted if they are met out Of the infl~w of foreign equity or where the source of funds is from EEFC (Exchange Earners Foreign Currency) accounts), (b) In addition to ECBs being prepaid out of foreign equity, corporates can av
Short Term Loan
While ECBs for a minimum maturity of three· years and above are sanctioned by the DEA, approvals of short-term foreign currency loans with a maturity of less than three years is sanctioned by the RBI, according to the RBI guidelines.
Validity of Approval
Approvals are valid for a period of six months, that is, the executed copy of the loan agreement is . required to be submitted within th
Exemption from WithhoLding Tax
Interest payable by an industrial undertaking in India (related to ECBs, as approved by Government RBI), would be eligible for taX exemptions as per Section l005Xiv)(b), (d) to (g) of the
Income Tax Act, 1961. Exemptions under Section HXI 5 Xiv)(b), (d) to (g) are granted by the Department of Economic Affairs while xemption under Section 10(115 Xiv(c) is granted by the Dep
Other Terms and Conditions
Apart from the maturity and end-use requirements given above, the f~ terms and conditions of each f;CB proposal are required to be reasonable and market related. The choice of sourcing the ECB currency of t1}e loan and the interest rate basis (i.e. floating or fixed) is left to he borrowers.
Security
The choice of security to be provided to the lenders suppliers is also left to the
Structured Obligations
In order to enable corporates to hedge exchange rate risks and raise resources domestically, domestic rupee denominated structured obligations are permitted to be credit enhanced by international banks international financial institutions joint venture partners, subject to following conditions: (a) In the. event of default, foreign banks giving guarantee would make payment of defaul