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,