At present, Indian companies issue American depository receipts (ADR) and global depository receipts (GDR) to foreign investors against underlying value of shares.
Although the scheme was announced by Finance Minister P Chidambaram in his interim budget, the government requires Election Commission’s permission to launch it as the model code of conduct is in force.
“The Finance Ministry has finalised the proposal related to widening the scope for issuance of foreign-listed securities by Indian firms against debt and sent it to EC for its clearance,” a senior finance ministry official said.
The new ADR/GDR norms will have to be notified by market regulator Sebi and Reserve Bank, he said, adding it would take some time for the scheme to come into force.
In order to make ADR/GDR more attractive, the government is also proposing to extend voting rights to holder of such securities.
While ADRs are traded on the US stock markets like New York Stock Exchange and Nasdaq, GDRs are listed on stock exchanges in other parts of the globe.
The official further said the proposal is in line with the report of former Sebi member M S Sahoo on revamping the ADR and GDR schemes.