Ministry of Finance Department of Economic Affairs 31st July, 2008 Proposed changes in the ADR/GDRs Pricing guidelines The

Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 was initiated in 1993 to allow the Indian Corporate sector to access global capital markets through issue of Foreign Currency Convertible Bonds (FCCBs)/Equity Shares under the Global Depository Receipt Mechanism (GDR) and American Depository Receipt Mechanism (ADR). The Scheme has been amended several times since then. 2. In order to bring the ADR/GDR guidelines in alignment with SEBIs guidelines on domestic

capital issues, Government, vide Press Note dated August 31, 2005, amended the pricing guidelines for Indian listed companies issuing FCCB/ADR/GDR. The present pricing clause, thus, reads as under: Listed Companies The pricing should not be less than the higher of the following two averages: (i) (ii) The average of the weekly high and low of the closing prices of the related shares quoted on The average of the weekly high and low of the closing prices of the related shares quoted on a

the stock exchange during the six months preceding the relevant date; stock exchange during the two week preceding the relevant date. The relevant date means the date thirty days prior to the date on which the meeting of the general body of shareholders is held, in terms of section 81 (IA) of the Companies Act, 1956, to consider the proposed issue. 3. In the normal circumstances the extant pricing norms provides protection from price

manipulation by the Issuer in domestic market. 4. In the recent period, Government has received a number of representations from

corporates that the extant pricing norms affect them adversely in the falling market. 5. In order to remove hardship to companies in a falling market, Government is considering to

modify the pricing guidelines for ADR/GDR issues. The proposal is to amend the parameter (i) of the pricing norms to two months in place of six months. In addition the definition of the relevant

date for such issues is also proposed to be modified as per SEBI (DIP) guidelines on preferential allotment and qualified institutions placements (QIP). 6. After the incorporation of proposed changes, the new pricing norms for ADR/GDR issues

will read as under: Listed Companies The pricing should not be less than the higher of the following two averages: (i) (ii) The average of the weekly high and low of the closing prices of the related shares quoted on the The average of the weekly high and low of the closing prices of the related shares quoted on a

stock exchange during the two months preceding the relevant date; stock exchange during the two week preceding the relevant date. The relevant date means the date when the Board of the issuing company passes the resolution authorizing the proposed issue. 7. Comments of the public are invited on the proposed changes mentioned above. Comments

may be sent to Shri A.M. Bajaj, Director (External Market), Department of Economic Affairs, Ministry of Finance, Room No.71, North Block, New Delhi110001 by mail or at am.bajaj@nic.in by email within the next 15 days.