Reply letter from SEBI - GTL Limited

 

  

Deputy General Manager

Corporation Finance Department

Division of Issues and Listing

( (Direct) : 22842826

(Board) : 22850451- 56 , 22880962 - 70 (Extn. : 367)

Fax : 22045633

Email : neelamb@sebi.gov.in 

CFD/DIL/MKS/NB/ /2004

July 13, 2004

 GTL Limited,

412, Janmabhoomi Chambers,

29, W.H. Marg,

Ballard Estate,

Mumbai – 400038.

 

Kind Attn: D.S. Gunashingh (Jt. Company Secretary)

 

Dear Sir,

Sub: Interpretive letter under the SEBI (Informal Guidance) Scheme, 2003 in connection with Issue of Foreign Currency Convertible Bonds (FCCBs) with approval of Central Government under Section 81(3) of the Companies Act, 1956. 

This has a reference to your letter dated June 11, 2004 on the above-mentioned subject seeking ‘interpretive letter’ under SEBI (Informal Guidance) Scheme, 2003.

 

1. You have represented in the above cited letter that your company is in the business of Network Engineering and IT Services and in view to participate in the emerging opportunities, intends to issue Foreign Currency Convertible Bonds (FCCB) in the international markets. With approval of Shareholders (by Special Resolution), you have made an application to the Central Government for permission under Section 81(3) of the Companies Act, 1956 for issue of such FCCBs.

 

2. You had sought clarification substantially on the following issues:

 

 

1. The Preferential Issue Guidelines of SEBI are not applicable to your proposed issue of FCCB under Section 81 (3) of the Act.
2. No approval of SEBI is required for the said purpose.

  

3.Without necessarily agreeing with your analysis, our interpretation on the aforesaid issues is as under: 
 

 

1. The issue of FCCBs are governed by two sets of regulations as follows:

 

• Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 – Regulation 18 & Schedule II.

 

• Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993.

 

2. It is opined that since the above are comprehensive laws covering FCCB issues and since the issue will be made outside India, Chapter XIII of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 do not apply to FCCB issues.

 

3. This opinion is with regard to the stage of issue of FCCBs and does not extend to the stage when the FCCBs are converted into equity shares.

 

This letter is based on the representation made to the Division of Issues and Listing in your letter. Different facts or conditions might require a different result. This letter expresses the Division’s position on enforcement action only. It does not express decision of the Board on the questions presented.

 

Yours faithfully,

NEELAM BHARDWAJ