Indian Depository Receipts (IDRs)


Q) What is an Indian Depository Receipt (IDR)?

A) An IDR is an instrument denominated in Indian Rupees in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with the Securities and Exchange Board of India) against the underlying equity shares of issuing company to enable foreign companies to raise funds from the Indian securities market.

Q) What are the legislations governing IDRs?

A) Central Government notified the Companies (Issue of Indian Depository Receipts) Rules, 2004 (IDR Rules) pursuant to the section 605 A of the Companies Act. SEBI issued guidelines for disclosure with respect to IDRs and notified the model listing agreement to be entered between Stock Exchange and the foreign issuer specifying continuous listing requirement.

Q) Who is eligible to issue IDRs

A) The eligibility criteria given under IDR Rules and Guidelines are as under:

The foreign issuing company shall have:- The size of the IDR issue shall not be less than Rs. 50 crores.

Q) Which intermediaries are involved in issuance of IDRs?

Q) Whether the draft prospectus for IDRs has to be filed with SEBI?

Yes. Foreign issuer is required to file the draft prospectus with SEBI while complying with the requirements of SEBI (ICDR) Regulations, 2009. Any changes specified by SEBI shall be incorporated in the final prospectus to be filed with Registrar of Companies.

Q) Whether any listing permission is required for issuance of IDRs?

Yes, the issuer company is required to obtain in-principle listing permission from all the recognized stock exchanges in which the issuer proposes to get its IDRs listed.

Q) Whether the IDRs are required to be listed in any stock exchange of India?

Yes. the IDRs are required to be listed in atleast one stock exchanges in India having nationawide terminals.

Q) Whether IDRs can be converted/redeemed into underlying equity shares?

IDRs can be converted/redeemed into the underlying equity shares only after the expiry of one year from the date of the listing of the IDRs, subject to the compliance of the related provisions of Foreign Exchange Management Act and Regulations issued thereunder by RBI & SEBI in this regard.

Q) What are the exit options available to the investor in IDR?

The investor may trade the IDRs in India or can request for redemption of the IDRs to the issuer company.

Q) Who is responsible to distribute the corporate benefits to the IDR holders?

On the receipt of dividend or other corporate action on the IDRs, the Domestic Depository shall distribute the corporate benefits to the IDR holders in proportion to their holdings in IDRs.

Q) Can an IDR holder appoint any nominee in case of death?

Yes, an IDR holder can at any time nominate a person to whom his IDRs shall vest in the event of his death.

Q) What are the requirements for investing in IDRs?

Following are some of the requirements for investing in IDRs:
Q) What is a fungibility window?

A) Fungibility window is the time period specified by the issuer company during which IDR holders can apply for conversion/redemption of IDRs into underlying equity shares.

Q) How is the IDR holder informed about the duration of fungibility window?

A) IDR holders can look for such announcements made by the company in leading English and Hindi national daily news papers with wide circulation as well as the websites of the stock exchanges.

Q) Can part of the IDR holding be converted / redeemed into shares?

An IDR holder has option of choosing the number of IDRs to be applied for conversion / redemption.


Updation History
First updated on 18th August 2020.