The
finance ministry has proposed reduction in the period of trading used
to compute the price at which equity shares could by way of American
Depository Receipts (ADRs) and Global Depository Receipts (GDRs). As
per the current regulations, companies have to price their ADRs/GDRs at
the higher point of the preceding six months' average price or last 15
days' average price before the issue. The finance ministry has proposed
to change this rule to the higher point of the preceding two months'
average price or last 15 days' average price.
The finance
ministry has also proposed that the average price could be considered
preceding the date of shareholders? meeting, which authorises the
company to raise funds through ADR and GDRs. At present, the average
price is worked out by considering share prices of the company in the
domestic stock exchanges, preceding 30 days of shareholders? meeting.
This is also expected to take the overseas issue price closer to the
domestic stock price of the issuing company.
The government will wait a fortnight to receive public comments after which it will notify the final changes.
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