Therefore, a holder of Global Depository Receipts cannot be called a member of the company.
Since, holder of Global Depository Receipts is neither the subscriber to the Memorandum nor a holder of the shares, his name cannot be entered in the Register of Members.
(a) As per section 41(1) & (2) of the Companies Act, a person is a member of the company, (i) who is a subscriber to the Memorandum or (ii) whose name has been entered in the register of members.
#Global depository receipts registration#
The Depository Act, 1996, defines the term “Depository” means “a company formed and registered under the Companies Act, 1956 and has been granted certificate of registration under subsection (1A) of section 12 of the Securities and Exchange Board of India Act, 1992.ĥ. As per the Companies Act, 1956 “Depository” has the same meaning as in the Depository Act, 1996. “Overseas Depository Bank” has been defined in the “Scheme”, means “a bank authorized by the issuing company to issue global depository receipts against issue of Foreign Currency Convertible Bonds or ordinary shares of the issuing company”. In the case of redemption, Overseas Depository Bank shall request the Domestic Custodian Bank to get the corresponding underlying shares released in favour of the non-resident investor, for being sold directly on behalf of the non-resident, or being transferred in the books of account of the issuing company in the name of the nonresident.Ĥ. (iii) A non-resident holder of Global Depository Receipts may transfer those receipts, or may ask the Overseas Depository Bank to redeem those receipts. (ii) When an issuing company issues ordinary shares or bonds under this Scheme, that company shall deliver the ordinary shares or bonds to a Domestic Custodian Bank who will, in terms of agreement, instruct the Overseas Depository Bank to issue Global Depository Receipt or Certificate to non-resident investors against the shares or bonds held by the Domestic Custodian Bank. (i) A Global Depository Receipt may be issued for one or more underlying shares or bonds held with the Domestic Custodian Bank. As per the Scheme issued by Department of Economic Affairs (DEA) in 1993, – ‘Global Depository Receipts’ (GDRs) has been defined under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 (“the Scheme”), as “an instrument in the form a depository receipt or certificate (by whatever name it is called) created by the overseas depository bank outside India and issued to non resident investors against the issue of ordinary shares or foreign currency convertible bonds of issuing company”.ģ. GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg Stock Exchange, and the London Stock Exchange, where they are traded on the International Order Book (IOB).Subject: Status of a holder of Global Depository Receipts (GDRs) ‑ Clarification regardingĪ question has arisen whether a non-resident holder of Global Depository Receipts is a member of the issuing company within the meaning of section 41 and 42 of the Companies Act, 1956.Ģ. Several international banks issue GDRs, such as JPMorgan Chase, Citigroup, Deutsche Bank, The Bank of New York Mellon. GDRs enable a company, the issuer, to access investors in capital markets outside of its home country. It is a negotiable instrument which is denominated in some freely convertible currency. Typically, 1 GDR is equal to 10 underlying shares, but any ratio can be used.
Prices of global depositary receipt are based on the values of related shares, but they are traded and settled independently of the underlying share. GDRs represent ownership of an underlying number of shares of a foreign company and are commonly used to invest in companies from developing or emerging markets by investors in developed markets. They are the global equivalent of the original American depositary receipts (ADR) on which they are based.
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