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Market regulator Sebi wants to end the practice of placing restrictive clauses by companies which strip their ADR/GDR investors of voting rights. The Sebi board meeting last week had deliberated on the need to remove obstacles to bringing the holders of global and American depository receipts (GDRs/ADRs) at par with domestic investors.
If implemented, it will trigger the takeover regulations even when the holders of ADRs/GDRs exceed certain percentage of stake or when their votes are used by the management to cross the threshold.
The move, which requires approvals from the finance ministry and the Reserve Bank, will ensure that managements do not gain undue control over companies by taking away the voting rights of their ADR/GDR holders.?
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It will impact on Indian Industry. As the investors of foreign have their own interest, but the present scenirio, it will not suits the Indian industry, in particular.