IPO FAQ - Indian Depository Receipt (IDR)

What is an IDR?

Answer:  

IDR stands for Indian Depository Receipt. An IDR is a depository receipt denominated in Indian Rupees issued by a depository in India. Each IDR will represent an ownership interest in a fixed number of shares or a fraction of shares of the issuer.

How do IDRs trade?

Answer:  

Upon issuance and listing, IDRs will be traded through the stock exchanges in India in a manner similar to the trading of other type of listed securities in India. IDRs will be allotted to investors in dematerialized form with the option to be held in certificate form.

Who can hold IDRs?

Answer:  

Under the current Indian rules and regulations, IDRs may be held, purchased or transferred by persons resident in India, or to, or for the account or benefit of, such person and non resident Indians (NRIs) and foreign institutional investors (FIIs) including SEBI-approved sub-accounts of FIIs registered with SEBI.

Are IDR holders entitled to the same rights holders of Shares?

Answer:  

In general for all corporate actions (including voting, right issues, the payment of dividends and other distributions), the issuer will treat IDR holders on an equitable basis vis-à-vis other holders of share in the home country of the issuer.

Given that the Indian securities regulation and reporting norms will differ from country to country. Will the issuer change its global reporting practice?

Answer:  

As set out in the IDR Listing Agreement, the issuer will continue to be governed by the reporting regime applicable in its country of primary listing.

How does an Indian IDR holder excise there voting rights in corporate actions?

Answer:  

IDR holders have voting rights with respect to the Shares underlying the IDRs and will generally be entitled to vote on resolutions of the issuer. IDR holders are entitled to instruct the Depository to exercise voting right in respect of the shares represented by their IDRs subject to the right of the Depository to request certain legal opinion form the issuer’s legal counsel in advance of any such exercise in certain limited circumstances.

Who will be the appropriate authority for IDR holder’s grievances?

Answer:  

IDRs are governed by Indian securities laws and regulations and grievance redress mechanism will be similar to grievance redress mechanism as in the case of equities in India.