Friday, November 15, 2013

Finance Ministry to relax ADR norms for Indian firms

After allowing unlisted India-registered companies  to list on exchanges abroad, the government is all set to ease norms for companies to raise money through American Depository Receipt (ADR)
issues in overseas equity markets. Sources in finance ministry said companies will now be allowed to issue level 2 and level 1 ADRs, which are easier and less expensive ways to raise money. Currently, Indian-listed companies are allowed to issue what is known as level 3 ADRs. Level 2 ADRs have easier listing requirements and can be listed on NASDAQ, while level 1 ADRs have the loosest listing requirements by the SEC and do not need to be listed. They can be traded over-the-counter level 3 ADRs means the company has to fulfil all conditions placed by the US Security and Exchange Commission (SEC) to list such an instrument on exchanges like NASDAQ and New York Stock Exchange (NYSE).

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