RULES FOR IDR OPRATIONALISED
Investment by Persons resident in India / FIIs / NRIs.
- The FEMA Regulations shall not be applicable to persons resident in India as defined under section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of transaction on a recognized Stock Exchange in India.
- Foreign Institutional Investors (FIIs) including SEBI approved sub-accounts of the FIIs, registered with SEBI and Non-Resident Indians (NRIs) may also invest, purchase, hold and transfer IDRs of eligible companies resident outside India and issued in the Indian capital market, subject to FEMA
- NRIs are allowed to invest in the IDRs out of funds held in their NRE / FCNR(B) account
- Automatic fungibility of IDRs is not permitted.
- IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from the date of issue of the IDRs.
Procedure for transfer and redemption.
At the time of redemption / conversion of IDRs into underlying shares, the Indian holders (persons resident in India) of IDRs shall comply with the provisions of FEMA
- Listed Indian companies and Indian Mutual Fund may sell or continue to hold the underlying shares subject to FEMA regulations.
- Other persons resident in India including resident individuals are allowed to hold the underlying shares only for the purpose of sale within a period of 30 days from the date of conversion of the IDRs into underlying shares.
- The FEMA provisions shall not apply to the holding of the underlying shares, on redemption of IDRs by the FIIs including SEBI approved sub-accounts of the FIIs and NRIs.
- The proceeds of the issue of IDRs shall immediately be repatriated outside India by the eligible companies issuing such IDRs.
- The IDRs issued shall be denominated in Indian Rupees.
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