Govt accepts Sahoo panel report on review of depository receipts scheme

The Centre has accepted the Sahoo panel report that reviewed the depository receipts scheme framed in the year 1993.

The key recommendations of the committee include allowing issuance of depository receipts against any underlying securities — equity or debt, by any issuer - listed or unlisted.

According to the Sahoo Panel recommendations, depository receipts can be issued both for capital raising through new shares or against existing/ secondary shares and the issuance may be either sponsored or non-sponsored.

Depository receipts will count as public shareholding if these have attached voting rights for holders, the recommendations said.

The Finance Ministry had in September 2013 set up a Committee under the chairmanship of MS Sahoo, Secretary, Institute of Company Secretaries of India, to undertake a comprehensive review of the foreign currency convertible bonds regime and the depository receipts mechanism.

This committee has submitted its report, and a draft new scheme which is to be notified at an appropriate stage after completion of enabling amendments, a Finance Ministry release issued on Tuesday said. The draft scheme covers depository receipts only and foreign currency convertible bonds have been left out of its ambit (these would continue to be governed by the existing scheme until further notification), the release added.

Depository receipts are receipts denominated in foreign currency created by a depository in the country of listing. There are two popular types of depository receipts — global depository receipts and American depository receipts.

In the second phase, the nine-member panel headed by Sahoo, a former whole-time member of SEBI, has been asked to review the framework on external commercial borrowings and FCCBs.

It was to have submitted its report by March-end, but is yet to do so, sources said.