The government has decided to change the pricing norm for issuing the foreign currency convertible bonds or equity shares under global depository receipt mechanism (GDR) and American Depository mechanism (ADR) in order to enable Indian corporations to access global capital markets.
Under the new pricing norm, the pricing of an ADR/GDR issue should not be less than the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the ‘relevant date.’
Earlier the norm suggested that the pricing should be the higher of the two prices—the average of the weekly high and low of the closing prices during the two week preceding the relevant date and the average of the weekly high and low of the closing prices during the six months preceding the relevant date
The definition of the ‘relevant date’ has also been revised. “Relevant date” now stand for the date of meeting in which the Board of the company or the Committee of Directors duly authorised by the Board of the company decides to open the proposed issue. Earlier “relevant date” stood for the date thirty days prior to the date on which the meeting of the general body of shareholders.
“Government has received a number of representations that the extant pricing norms affect corporates adversely in a bearish market," the finance ministry said in a statement.