The Hindu : Business : FCCB norms eased

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Friday, Nov 28, 2008
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Business

FCCB norms eased

Special Correspondent

NEW DELHI: The Central Government on Thursday eased the norms for issuance of foreign currency convertible bonds (FCCBs) and equity through ADRs (American Depository Receipts) and GDRs (Global Depository Receipts) to provide greater freedom to corporates in pricing their equity shares.

As per the revised norms, the price of shares to be issued to overseas investors should not be less than the average of the weekly high and low prices on the stock exchanges during two weeks, instead of six months prescribed under the earlier guidelines.

For this purpose, the Government has removed the condition that FCCBs and equity shares under GDRs and ADRs should not be priced at less than the average weekly high and low price on the stock exchanges during the six-month period. The FCCB guidelines have been accordingly amended on the industry’s representations seeking relaxation in pricing norms in view of the bearish market conditions.

According to an official statement here, the minimum price of equity shares under the new norms would be based on the average of high and low price on the stock exchanges for two weeks and not six months. The term ‘relevant date’ for the applicability of FCCB guidelines has also been redefined and would now be the date of the board meeting during which the company takes a decision to issue bonds/equity to overseas investors.

Earlier, the ‘relevant date’ was defined as 30 days prior to the date of the meeting of shareholders to consider the proposed issue.

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