[Last updated: 1 January 2024, unless otherwise noted]

The documentation required and the listing process for a foreign company proposing to list its IDRs on the Stock Exchanges are substantially similar to that of a domestic company proposing to list its shares. Both the domestic company and the foreign company must appoint one or more BRLMs. The BRLMs, along with the legal counsels and auditors, conduct a due diligence exercise on the issuer to ascertain that true, correct and proper disclosures have been made in the offering documents as required under the ICDR Regulations, the IDR Rules and the Indian Companies Act.

An issuer must submit a draft red herring prospectus (DRHP), which in the case of an IDR offering can be as a confidential filing or a public filing (in both scenarios, the filings must be made through a BRLM). In case of a confidential filing, the BRLMs must subsequently do a public filing of the SEBI-approved red herring prospectus (RHP), which must be made public for 21 days.

In the case of a public filing of a DRHP, the DRHP can be viewed after the filing with the SEBI. After receipt of approval from the SEBI and the Stock Exchanges, the BRLMs must file an RHP with the SEBI and the Registrar of Companies, New Delhi (in the case of a domestic company, the filing would be made with the Registrar of Companies where the company's registered office is situated).

In addition to the prospectus, the issuer has to provide to the Stock Exchanges, SEBI and Registrar of Companies, New Delhi:

• Constitutional documents of the issuer.
• Enactment of law under which the issuer was set up.
• Address of the issuer's principal office in India (if the issuer does not have a principal office in India, then an address where the documents submitted are made available for public inspection).
• A certified copy of the issuer's certificate of incorporation.
• Copies of agreements between the issuer, the overseas custodian bank and the domestic depository which, must among other things, define the rights of the IDR holders.

Regulatory permissions required for listing of IDRs include permissions from the SEBI, Stock Exchanges and from sector regulators in case IDRs are being raised by financial or banking companies with a presence in India (through a branch or subsidiary). An application to the SEBI has to be made at least 90 days before the opening of the issue.

The principal intermediaries, in addition to the BRLMs, in an IDR listing include an overseas custodian bank and a domestic depository. The issuer must deliver the underlying equity shares or cause them to be delivered to the overseas custodian bank, which must authorize the domestic depository to issue the IDRs.

Proceeds of IDRs are required to be repatriated outside India by issuers. Indian foreign exchange control regulations regulate the holding of IDR shares by Indian entities upon redemption of IDRs.

Disclosures in DRHP, RHP and Prospectus for an IDR listing

The DRHP, the RHP and the Prospectus (collectively, the Offer Documents) must include the information prescribed under Schedule VIII Part A of the ICDR Regulations, the Schedule to the IDR Rules and the RFC Rules. It must, as a general principle, contain all information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer, of the shares, and of the rights attaching to the shares.

Below is a summary of the contents of the Offer Documents:

• General information about the issuer.
• A description of the issuer's business and principal activities.
• Terms of the issue, description of the IDR and the rights of the IDR holder.
• Object of the issue.
• Risk factors relating to the issuer and its industry.
• Risk factors in relation to the home country of the issuer.
• Risk factors associated with the IDR/underlying shares.
• Listing of the major shareholders of the issuer.
• Details of the industry in which the issuer operates.
• Significant new products and services and principal markets.
• Details of property, plant and equipment of the issuer.
• Organization structure.
• Corporate governance compliance.
• Details of the issuer's management.
• Recent related party transactions.
• Selected financial information.
• A description in narrative form of the issuer's financial condition, changes in financial condition and results of the operations for the periods covered by the financial statements and any significant factors affecting its operating results.
• Material developments after the date of the last financial results.
• Details of the subsidiaries and associates of the issuer.
• Market price information and other information concerning the shares in the domestic market of the issuer.
• Foreign investment and exchange controls of the country of the incorporation where shares are listed.
• Securities market of the country of incorporation where the issuer's shares are listed.
• Details of the auditors.
• Details of the BRLMs.
• Details of legal counsels.
• Material outstanding litigations and defaults.
• Other miscellaneous information, including transfer of shares and depository receipts, information relating to the depository, approvals of the government/regulatory authorities, dividend policy, basis of issue price, exchange rates, capitalization statement, details of the issuer's share capital, articles of association or charter, rights attached to shares, and a summary of material contracts.

Financial information. The Offer Documents should include audited consolidated or unconsolidated financial statements, prepared in accordance with Indian GAAP or Indian Accounting Standards (Ind AS) until 31 March 2020, and Ind AS thereafter or with the International Financial Reporting Standards (IFRS) or US GAAP for a period of three financial years immediately preceding the date of prospectus. If the financial results are prepared as per IFRS or US GAAP, they must be audited by a professional accountant or certified public accountant or equivalent in the issuer's country in accordance with International Standards of Auditing (ISA), and the Offer Documents must describe the significant differences between US GAAP/IFRS and Indian GAAP and/or Ind AS. The format of disclosure of financial results may be as per the disclosure requirements of the country where the securities of the issuer are listed.

Where an issuer is required by the laws of the jurisdiction of its incorporation to file its annual statutory audit of accounts, a report of the statutory auditor on its audited financial statements for each of the three financial years immediately preceding the date of the prospectus must be included. Where the issuer is under no such requirement, a report on the audited financial statements of the issuer for each of the three financial years immediately preceding the date of the Offer Documents, prepared in consonance with Indian GAAP and/or Ind AS and certified by a certified chartered accountant, must be disclosed in the relevant Offer Document. The Offer Documents should also contain information relating to the relevant provisions of taxation law, tax treaties and their impact on the IDR holders.

The Offer Documents must contain a detailed analysis of the financial statements, comparing the latest financial year results with the previous three financial years. This includes an overview of the business of the issuer, factors that may affect the results of operation and an analysis of reasons for the changes in significant items of income and expenditure.

Typical process and timetable for an IDR listing

The following flow chart summarizes the listing process:

Link to Chart

The following table summarizes the standard timetable for an IDR listing:

Link to Timetable

Rights issues

The SEBI has set up a detailed framework for rights issue of IDRs. The highlights of this framework are as follows.

Eligibility. At the time of undertaking the rights issue, an issuer must be in compliance with all ongoing material obligations under the relevant listing agreement and the Listing Regulations, as may be applicable to such issuer or material obligations under the deposit agreement entered into between the domestic depository and the issuer at the time of the initial offering of IDRs.

Renunciation. Unless the laws of the home jurisdiction of the issuer otherwise provide, the rights offering is deemed to include a right exercisable by the IDR holder to renounce the IDRs offered in favor of any other person subject to applicable laws and the same shall be disclosed in the offer document.

Pricing. The issue price and the ratio shall be decided simultaneously with the record date in accordance with the home country regulations.

Withdrawal. An issue cannot be withdrawn after the issuer announces the record date without, among other things, informing the SEBI and giving public notice. If an issuer withdraws the rights issue after announcing the record date, it is barred from making an application for offering of IDRs on a rights basis for a period of 12 months from that record date.

Disclosures. The offer document is required to contain disclosures as required under the home country regulations of the issuer. Additionally, a "wrap" (addendum to offer document) containing certain prescribed information must be attached to the offer document to be circulated in India. Both the offer document and the "wrap" must contain all material information to enable potential investors to make (as prescribed in Part C of Schedule VIII of the SEBI ICDR Regulations and other
instructions as to the procedures and process to be followed with respect to rights issue of IDRs in
India) an informed investment decision.

Approvals. Like in the initial offering of IDRs, approvals of the Stock Exchanges and sector-related approvals, if any, are required. In addition, the offer document undergoes a review process by the SEBI.