RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001

May 19, 1999

A.D.(M.A.Series) Circular No.18

To,

All Authorised Dealers in Foreign Exchange

Dear Sirs,

General permission for acquiring underlying shares after conversion of GDRs/ADRs by Non-Residents and entering addresses of the non-resident holders of such released shares in the books of the Company/Depository

Attention of authorised dealers is invited to paragraph 10B.10(ii) of the Exchange Control Manual regarding general exemption granted by Reserve Bank permitting transfer of underlying shares after conversion of GDRs/ADRs from non-residents to residents provided (a) such shares were released by the Indian custodian of a GDR/ADR issue against surrender of GDRs/ADRs by the non-resident concerned, and (b) the sale was made on a stock exchange or the shares were offered for sale in terms of an offer made under the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 1997. In such cases, the foreign investor, however, is required to obtain approval of Reserve Bank under Section 29 of Foreign Exchange Regulation Act (FERA), 1973 for acquiring the shares of the company concerned against surrender of ADRs/GDRs. Similarly the Indian Company concerned would also need approval of Reserve Bank under Section 19 of FERA, 1973 for registering the shares in the name of the foreign investor.

2. In order to simplify the procedure, Reserve Bank has issued a Notification No.F.E.R.A.193/99-RB dated 16th March 1999 granting (a) exemption from the operation of provisions of Section 29(1)(b) of FERA 1973 to non-resident holder to acquire the underlying shares released by the Indian custodian of ADRs/GDRs upon surrender of the ADRs/GDRs, and, (b) general permission to the company/depository concerned under Section 19(4) of FERA 1973 for entering an address outside India in its register or books in respect of such shares.

3. Authorised dealers may bring the contents of this circular to the notice of their concerned constituents.

4. The following consequential amendments may be carried in the Exchange Control Manual.

Volume I

A new paragraph 10B.10(ii)A may be incorporated as per Slip 1.

Volume II

A new Notification No.FERA.193/99-RB dated 16th March 1999 may be added under Section 19 in Appendix III as per Slip 2.

5. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.

Yours faithfully,
B. MAHESHWARAN
Chief General Manager

Slip 1
[AD/MA 18/1999]
10B.10(ii)A
Reserve Bank has granted general exemption vide its Notification No.F.E.R.A.193/99-RB dated 16th March 1999 permitting, (a) the non-resident holders of ADRs/GDRs issued by a company registered in India to acquire the underlying shares against surrender of ADRs/GDRs held by them when such shares are released by the Indian Custodian of the ADR/GDR issue, and (b) the company/depository concerned to enter in its register or books an address outside India of the non-resident holder in respect of the underlying shares issued against surrender of ADRs/GDRs.