Sebi: StanChart need not convert IDRs into shares

FPJ BureauUpdated: Sunday, June 02, 2019, 09:01 AM IST
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Mumbai UKalt39s Standard Chartered Bank, which was the first foreign lender to come out with Indian depository receipts, will not be required to convert their IDRs into shares as per the guidelines issued by SEBI. After the announcement of

guidelines by the Securities and Exchange Board of India ( SEBI) on Friday, the company whose IDRs are frequently traded on Indian stock markets need not convert them into underlying shares after one year of getting listed.

” After the completion of one year from the date of issuance of IDRs, redemption of the IDRs shall be permitted only if the IDRs are infrequently traded on the stock exchange( s) in India,” SEBI said while clarifying the position with regard to StanChart IDRs.

An IDR represents ownership in shares of a foreign firm, which trades in domestic capital market. An IDR is bought and sold just like a regular stock.

StanChart is the only foreign company to have issued IDRs to the Indian shareholders. 10 StanChart IDRs represent one underlying equity of the UK- listed bank. The StanChart IDRs were due to come up for redemption on June 11, 2011.

The SEBI norms said that if the annual trading turnover in IDRs in the preceding six calendar months before redemption is less than five per cent, then only the company could go into for redemption of IDRs.

As per data compiled by market research firm SMC Global, the annualised trading volume of the IDRs of StanChart in the last six months is 48.65 per cent, which is much higher than the required 5 per cent limit.

Commenting on the SEBI norms, SMC Global Securities Strategist & Head of Research Jagannadham Thunuguntla said the move would help to retain liquidity in the IDR market.

THE company whose IDRs are frequently traded on Indian stock markets need not convert them into underlying shares after one year of getting listed: SEBI

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