Procedure of issuing instruments

Agencies Involved in the GDR Issue

Lead Manager -The firm should be registered with the
appropriate regulatory authority in Europe/ Singapore or
Japan.

Depository Is an Overseas Bank authorised by the Issuing
Company to Issue the GDRs.

Listing Agent - Is a person who is responsible for the listing of
the GDRs at any of the recognized Overseas Stock Exchanges.
Generally the Depository also acts as the Listing Agent.
Agencies Involved in the GDR Issue
contd

Custodian - It is the domestic Bank who holds the underlying
shares/ Bonds Issued against the GDRs.

Indian Legal Counsel - It is a firm that undertakes the Legal
and Financial Due Diligence of the Issuing Companies on
behalf of the Lead Manager. It also assists the Company in
preparation of the Information Memorandum/ offer
document for submitting it with the Overseas Stock Exchange.
Agencies Involved in the GDR Issue
contd
UK Counsel - An overseas legal person who based on the Due
Diligence Report of the Indian Counsel submits its report to
the Overseas Stock Exchange. They also assist the Lead
Manager in preparation of the various documents such as the
Deposit Agreement, Subscription Agreement and vet the
Information Memorandum (IM).

Escrow Agent - An Overseas Bank where an Escrow Account
has to be opened for deposit of the monies received from
Investors against the GDR Issue till the Final Listing Approval is
obtained from the Overseas Stock Exchange

Procedure for Issue of GDRs
Convene a Board Meeting to approve the proposed GDR
Issue for not exceeding certain value in foreign currency.
Convene the EGM for the approval of the shareholders for
the proposed GDR Issue under Sec 81(1A) of the
Companies Act, 1956.
Identify the Agencies
Convene a Board Meeting to approve the Agencies.
Appoint the Agencies and sign the Engagement Letters.
The Indian Legal Counsel to undertake the Due Diligence.

Procedure for Issue of GDRs
contd
Prepare the first draft of the IM in consultation with the
Indian Legal Counsel and submit the same to various Agencies
for their comments thereon.
Prepare the 2
nd
/3
rd
draft of IM incorporating the comments.
The Listing Agent to submit the IM with the overseas Stock
Exchange for their comments and In principle Listing
Approval.
Simultaneously submit draft IM to the Indian Stock Exchanges
where the Issuing Companys shares are listed for In principle
approval for listing of the underlying shares.
Procedure for Issue of GDRs
contd
Hold Board Meeting to approve the Deposit Agreement,
Subscription Agreement and the Escrow Agreement.
On receipt of the comments on the IM from the Overseas
and Indian Stock Exchanges incorporate the same and file
the final IM with Overseas Stock Exchange and obtain Final
Listing.
The Issuing Company can open the Issue for the GDR on
receipt of the In principle Listing Approval from the
Overseas and the Indian Stock Exchanges.


Procedure for Issue of GDRs
contd
Open the Escrow Account with the Escrow Agent and
execute the Escrow Agreement.

In consultation with the Lead Manager to finalize
- whether the GDR will be through public or a private
placement,
- the number of GDRs to be issued.
- the issue price. (the Issue price is normally 5-10 %
discounted prevalent market price of the shares of the
Issuing Company one day prior to the opening of the GDR
Issue.
- number of underlying shares to be issued against
each GDR.


Procedure for Issue of GDRs
contd

On the day of the opening of the Issue execute the Deposit
and Subscription Agreements.

The Issue should be kept open for a minimum period of 3
working days.

Immediately on closing of the Issue convene a Board/
Committee Meeting for allotment of the underlying shares
against the Issue of the GDRs.

Then Deliver the share certificate to the Domestic Custodian
Bank who will in terms of the Agreement instruct the
Overseas Depository Bank to Issue the GDR to Non Resident
Investor against the shares held by the Domestic Custodian
Bank.
Procedure for Issue of GDRs
contd
On receipt of Listing Approval from Overseas Stock Exchange
submit the required documents for Final In principle Listing
approval from Indian Stock Exchange.

After GDRs are listed the Lead Manager to instruct the Escrow
Agent to transfer the Funds to the Companys Account.

The Company can either remit the entire funds or in part as
per its discretion.
Procedure for Issue of GDRs
contd
On obtaining the Final Approval from Indian Stock Exchanges
admit the underlying shares to the depository i.e., NSDL and
CDSL.

Obtain Trading approval.

Intimate the Custodian for converting the physical shares into
Demat.



Bond

14

Figure 24.2 A Bearer Bond and Its Unclipped Coupons Issued
by the Elmira and Williamsport Railroad Company for $500
15
Bonds
The Issuing Process
The mandate
Appointing the lead manager (see the parties involved) and, advised by them, choosing the size, structure and
timing of the bond issue.

Due diligence
Providing and verifying all the information required for the issuer's listing document and the supporting
documentation. Legal advisers lead this work.

Preparation
Preparing the documents including the information memorandum and listing particulars and presenting them to
the UKLA and the Exchange.

Launch
With the due diligence and marketing completed, this is the official announcement of the bond issue when the
lead manager invites the syndicate (see the parties involved) to participate in placing the bonds with investors.

Signing and closing
The signing is when an issuer and their advisers sign and execute all the documents. Shortly after this and the
closing, the issuer receive the proceeds of their bond issue.

Secondary market trading
With the bonds now listed on the London Stock Exchange they are eligible to be traded by investors, either on the
open market or, in the case of Eurobonds, by private deals between institutional investors.

Ref; the London stock Exchange
16
Parties involved

There are a number of parties to every bond issue, each with their own role to play in assisting the
issuer and ensuring the issue's success. Here we summarise the roles of the main players.

Lead manager and syndicate
The lead manager, normally a financial institution such as an investment bank, is responsible for managing
the entire issue process. As well as advising the issuer on the structure and timing of the issue, the lead
manager appoints the syndicate, a group of investment banks that will market and sell (and, usually,
underwrite) the issue.

Legal advisers
Responsible for the due diligence process verifying statements of fact - and for the drafting of the listing
particulars and the supporting documentation.

Paying agents
The paying agent is responsible for receiving a bond's interest payments from the issuer and distributing
them to the bondholders.

Clearing systems and depositary
Euroclear and Clearstream are the two main systems for monitoring and validating the transfer of bonds
('clearing') listed in London in both the primary and secondary markets. Most bonds are issued in bearer
form and held by a depositary (usually a bank) for safe keeping.

Trustee
Appointed by the investors in the notes, the trustee is the representative of the bondholders, charged
with protecting their rights and ensuring the terms of the bond are adhered to.

Fiscal agent
Acts on the behalf of the issuer to ensure the payment of interest and principal.

17
Bonds
The Issuing Process
Typical Time Lines
Mandate Launch Signing Closing
3 to 8 weeks up to 2 weeks up to 1 week
London
Listing
UKLA
LSE
Listing
application
Listing particulars
approved
Listing granted
Listing effective
Application for admission
to trading
Admission granted Trading may begin
*
10 clear business days 2 days
1 day
** 2 days