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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 to time by the Govemment (discussed subsequently), A   software company' is a company engaged in the manufacture/production of software and at least 80 per cent of its turnover is from software   elated activities. Information technology software/services include means companies that deal with such activities as  defined in  recommendation 19<a) and (b) of the notification issued by the planning Commission  on July 25, 1998. According to recommendation  9(a), rr software ~ans any representation of  instructions; data; sound/image, including source code and object code recorded in a machine  n  readable form and capable of being manipulated or providing interactive features to a user by means of a automatic' data processing  machine fall under the heading of IT products, but does not  include non-IT products.

rr service is defined as any service that results-from the  use of any IT  software over a system of IT products for realising value additions. The term rr Industry would cover development, production   and services related to IT products; the term IT software should replace computer software. According to 19(b), IT' products include  computer, digital/data communication  and digital/data broadcasting products. Such companies are also eligible to offer GDRs to the non- resident/resident permanent employees (including Indian and overseas working directors)  of their' subsidiary companies, incorporated in  india or abroad and engaged in IT software/service.  s, against the issue of ordinary shares, subject to the eligibility conditions and  operational guide-' linc:s/conditionality announced from time to time by the Government. Similarly, Indian companies  registered in India  and engaged in the following sectors/areas where 80 per cent of turnover   is from these sector/areas of the operation/business of the  company in the previous financial'  years, are eligible to offer CORsI ADRs against the issue of ordinary shares to their non-resident! resident permanent employees (including Indian and overseas working directors) and also to their SUbsidiary companies,   incorporated in India or abroad, !>subject the eligibility conditions and operational guidelines/conditionalities announced from time to   time by the Government: (i) Information Technology (as defined in the recommendation. 19(a) and (b) of Gazette Notification dated  2>-7-999, issued by the Planning Commission) and EnteRtainment Software, (ij) Pharmaceuticals,

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