MCA has amended the Companies (Global Depository Receipts), 2014 vide its amendment dated 13th February, 2020. The salient features of the amendment are as follows:
Note on Companies (Issue of Global Depository Receipts) Amendment Rules, 2020:-
- Date of notification was on 13th Feb, 2020.
- It shall come into force on the date of their publication in Official Gazette which means as of now it is not in force.
- Central Government has exercise its powers as provided in section 41 read with section 469 of the Companies Act , 2013 in order to amend the Companies (Issue of Global Depository Receipts) Amendment Rules, 2014.
- The amended rules may be called as Companies (Issue of Global Depository Receipts) Amendment Rules, 2020.
- In Companies (Issue of Global Depository Receipts) Amendment Rules, 2014 the words bracket and figures “Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Scheme, 1993” shall be replaced by the words and figures “Depository Receipt Scheme, 1993”.
- Also in sub rule (1) after the clause (a) which is relating to definitions, the new clause shall be inserted that is: (aa) “overseas depository” or “overseas depository bank” shall mean “foreign depository” as defined in the scheme.
- Earlier, rule 5 sub rule (1) pertains to manner and form of depository receipts and states that the depository receipts can be issued by way of public offering or private placement or in any other manner which is prevailing abroad and may be listed or traded in an overseas listing or trading platform. But after the amendment in the sais sub rule now the depository receipts can be issued by way of public offering or private placement or in any other manner prevalent in the concerned jurisdiction and may be listed or traded on the listing or trading platform in the concerned jurisdiction only.
- Also, earlier in sub rule (3) states that the underlying shares held by a domestic custodian bank shall be allotted in the name of the overseas depository bank and against such shares, the depository receipts shall be issued by the overseas depository bank abroad. It is to be noted that after the post amendment the word ‘abroad’ shall be omitted. This is just a technical amendment to remove the word “abroad” because the word “overseas” is already appearing there.
- Earlier, rule 7, which pertains to proceeds of issue and states that the proceeds of issue of depository receipts shall either be remitted to a bank account in India or in Indian Bank operating abroad or in any foreign bank which is a schedule bank as per RBI act, 1934 and having operations in India. Also such foreign bank shall take the responsibility of furnishing all the information as may be required and the proceeds of the sale shall be credited to the respective bank account of the shareholders. After the amendment in the said rule now a new proviso shall be inserted which states that proceeds of issue of depository receipts may be remitted in an IBU and the same shall be utilized as per the directions issued by RBI from time to time.
- Rule 9 sub rule(1) has also been amended which earlier pertains to, non applicability of certain provisions of the Act and states that the provisions of the act as well of the rules issued with respect to public issue of shares or debentures shall not apply upon issue of depository receipts abroad. But as of now after the amendment the word “abroad “ shall be deleted which means that the provisions of the act as well of the rules issued with respect to public issue of shares or debentures shall not apply upon issue of depository receipts. This is only a technical amendment to rectify drafting errors.