Govt to dilute IDR norms to woo foreign firms
The new norms are likely to dilute terms for pre-issued paid-up capital, free reserves and minimum average market capitalisation.business Updated: May 20, 2007 19:34 IST
The government is likely to make the entry of foreign companies to Indian bourses easier by diluting the Indian Depository Receipts norms regarding pre-issue capital and market capitalisation by next month.
Indian Depository Receipts (IDRs) are financial instruments that allow foreign companies to mobilise funds from Indian markets by offering equity and getting listed the stock exchanges.
This instrument is similar to GDRs and ADRs that allow foreign companies to raise funds from European and American markets respectively.
The Ministry of Corporate Affairs has cleared the final guidelines and it will be sent to Law Ministry for vetting, official sources said.
Modified guidelines are likely to be notified by the end of this month or by early next month after which companies registered abroad are likely to evince interest in tapping Indian markets, they said.
The modified IDR guidelines are likely to dilute the conditions for pre-issued paid-up capital, free reserves and minimum average market capitalisation of the company.
The existing guidelines, issued in 2004, require companies to have at least $100 million as pre-issue paid up capital and free reserves and $500 million average turnover during three financial years preceding the issue.
These requirements are likely to be cut to $50 million and $100 million, the sources said.