The Securities and Exchange Board of India (SEBI) on Tuesday said that it has simplified the listing agreement for Indian Depository Receipts (IDRs) to encourage global companies to get listed in India.
“In order to reduce the additional regulatory or cost burden to the issuers, it has been decided to simplify the listing requirements applicable to the issuers from the countries which are the signatories of Multilateral Memorandum of Understanding (MMOU) of International Organization of Securities Commissions (IOSCO),” SEBI’s press release said.
The decision will lead to alignment of the disclosure norms that they follow in their home country with that required in India as both are members of IOSCO and follow same international guidelines.
IDRs are instruments created by an Indian depository (for instance— NSDL) against the underlying equity shares of the issuing foreign company to be subscribed by investors in India and the company gets listed on the Indian stock exchange.
It is similar to ADR (American Depository Receipt) that is issued by Indian companies to get listed in America.
As of now foreign companies have not got themselves listed in India through the IDR route as there was no model agreement.
Experts say that this is a move that will encourage and give preferential treatment for listing to companies that belong to countries who are member of IOSCO.