What is IDR (Indian Depository Receipt)?
There is a depository receipt in India prepared by Indian Depository i.e. IDR. It is similar to Global Depository Receipt (GDR). American Depository Receipt (ADR) is a also a kind of same depository. Under ISR, foreign companies issue their shares and in return they get the depository receipt from the National Security Depositary in return of investing in India. Under IDR, the shares of foreign investors are secured in India. There are many foreign banks whose branches are also in India. They have to take permission from foreign ministry for investment.
Indian Depositary has to make a contract with SEBI. Permission is required before the release of IDR from SEBI by applying there. There is a need to be listed in stock exchange in India for the free transfer of IDR. Foreign company has to pay capital for issuing IDR and capital of 100 crore is must as reserve. The turnover is Rs. 500 crore in last three years from the sale of IDR.
Foreign companies have to distribute the 10% of the profit, earned by them in the last five years, as dividend. The ratio of pre-issue date equity should not exceed the ratio of 2:1. Undoubtedly, IDR is proving a very good instrument for Indian investors for investing in abroad.
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