Units of Foreign Investment in the Issuing Company
The ordinary-shares and FC-::R:.issued against GDR~/ADR~should be treated as direct foreign investment in the issuing company. The aggregate of the foreign investment, made either directly or indirectly through GDR ADR mechanism, should not exceed 51 per cent of the issue and the subscribed capital of the issuing company. However, investments made through offshore funds or by foreign institutional investors would not form pan of the limit.
GDRs leADERs may be listed on any of the overseas stock exchanges, or over the counter exchanges or through the book entry transfer system relevant abroad. They may be purchased, possessed and freely transferable by a person who is a non-resident. A listed company may sponsor an issue of ADRs GDRs with an overseas depository against shares held by its shareholders. Such a facility would be available pari passu to all categories of the company shareholders whose shares are being sold in the ADR GDR market overseas. Such issues would need o conform to the FDI policy and other mandatory statutory requirements. The provisions of FEMA would also need to be adhered to.