Category Archives: INTERNATIONAL FINANCIAL MANAGEMENT

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