IFSCA - Regulations, Listing and Compliances · Listing and Issuance of Securities

IFSCA Depository Receipts and Other Listed Instruments

Updated 11 October 2026 · Fact-checked

A depository receipt (DR) is a negotiable instrument issued by a depository against securities held with a custodian. Under the IFSCA listing framework, DRs and specialised instruments, such as sustainable debt and structured products, can list on an IFSC exchange if they meet eligibility, disclosure and ongoing compliance conditions. Answer by applying provision, facts, conclusion.

Understand Depository Receipts and Other Instruments

A depository receipt lets investors hold a security of one company through a receipt issued in another market. The underlying shares stay with a custodian. The depository issues receipts against them. The receipts trade and settle like securities, so the holder avoids direct handling of the underlying shares.

This is how Indian companies can reach global investors from GIFT City. A company lists DRs on an IFSC stock exchange. Investors pay in foreign currency. Two layers of law apply, and you must check both. The first is the Indian framework for issuing DRs abroad, including in IFSC. This is governed by the Companies Act, 2013 and the rules and schemes under it, together with FEMA. The second is the IFSCA text on who may issue, who may act as depository and custodian, and the conditions for listing. An IFSC listing does not remove the first layer. Treat it as a separate check, not an afterthought.

DRs are of two broad kinds. In a sponsored DR, the issuer takes part in the programme and signs an agreement with the depository. In an unsponsored DR, the depository creates receipts without the issuer's involvement. Know which type the question describes, because the issuer's duties and disclosures differ. Confirm in the regulations whether a particular kind is permitted for listing.

Besides DRs, the IFSC framework recognises specialised instruments. These include ESG-labelled debt, such as green, social, sustainability and sustainability-linked bonds, and structured products. Green, social and sustainability bonds carry extra disclosure on use of proceeds, project evaluation, management of proceeds and reporting on impact. Sustainability-linked bonds do not rest on use of proceeds. Their disclosure centres on key performance indicators (KPIs), sustainability performance targets, and how the bond's terms change with those targets. This is meant to curb "greenwashing", where a bond is labelled green or sustainable without real backing.

For each instrument, the exam usually tests the same pattern: who can issue, what must be disclosed, where it can be listed, and what the issuer must do after listing. Treat each instrument as a variation of the core listing framework. Do not memorise it as a separate subject.

Key rules to remember

Structure of a DR programme: Underlying securities → custodian → depository issues DRs → DRs listed on IFSC exchange; Use this chain to explain who holds what. Add the issuer's agreement with the depository in a sponsored programme.
Sponsored vs unsponsored DR: Sponsored = issuer is party to the programme; Unsponsored = depository acts without issuer; State which type the facts show before applying any condition.
Labelled debt disclosure test (green, social, sustainability bonds): Label + use of proceeds + project evaluation + management of proceeds + ongoing reporting; These five elements are the usual basis for green, social and sustainability bonds only. Check the exact IFSCA wording.
Sustainability-linked bond disclosure test: KPIs + sustainability performance targets + bond characteristics that vary with the targets + verification and reporting; Sustainability-linked bonds are not use-of-proceeds instruments. Do not apply the five-element test above to them. Check the exact IFSCA wording.
Answer frame: Provision → Facts → Analysis → Conclusion; Required in case-based answers. Name the regulation instead of guessing section numbers.

How to solve Depository Receipts and Other Instruments questions

Use this method for any case-based question on DRs or specialised instruments in IFSC.

1Identify the instrument: DR, labelled bond, or structured product.
2Identify the parties: issuer, depository, custodian, sponsor, exchange, investors.
3State the governing IFSCA regulation or framework in plain words, without inventing section numbers.
4For a DR issue by an Indian company, check separately the Indian framework for DR issuance abroad (Companies Act, 2013 and the rules and schemes under it, and FEMA). This applies in addition to the IFSCA conditions.
5List the eligibility and disclosure conditions that apply to that instrument.
6Match each condition to the facts and mark which are met and which are missing.
7For green, social and sustainability bonds, check the use of proceeds, project evaluation, management of proceeds and reporting commitments. For sustainability-linked bonds, check the KPIs, sustainability performance targets, how the bond's terms vary with the targets, and verification and reporting.
8Note the post-listing duties: continuous disclosures and reporting.
9Write a clear conclusion and a practical recommendation, such as a document to draft or a filing to make.

Quickest way: Instrument, party, condition, duty

When to use it: Use when time is short and the question asks you to advise on listing an instrument in IFSC.

Write the instrument type in one line.
Name the parties and the exchange.
Give three or four key conditions in bullets.
Apply them to the facts in one line each.
End with the continuing duties and your conclusion.

Common mistakes in Depository Receipts and Other Instruments

Confusing sponsored and unsponsored DRs.
Both use the same structure of custodian and depository, so they look alike.
Fix: Check whether the issuer is a party to the programme. That decides its duties.
Saying the DR holder owns the shares directly.
Students skip the custodian layer.
Fix: Say the custodian holds the underlying shares and the depository issues receipts against them.
Treating a green label as self-certifying.
Students focus on the name and ignore the disclosure conditions.
Fix: For a green, social or sustainability bond, discuss use of proceeds, evaluation and ongoing reporting. For a sustainability-linked bond, discuss KPIs, targets and verification.
Quoting section or regulation numbers from memory.
Students try to look precise.
Fix: Name the regulation and state the rule in words. A wrong number loses marks.
Stopping at listing and ignoring continuing obligations.
The question seems to ask only about listing.
Fix: Add a closing line on continuous disclosures and reporting after listing.

Worked examples

Example 1

An Indian company wants to raise capital from global investors by listing on an exchange in GIFT City without a separate overseas listing. Advise on the route and the key points to be checked.

Show the solution

Provision: DRs can be listed on an IFSC exchange under the IFSCA listing framework. The depository issues receipts against underlying shares held with a custodian. Separately, an Indian company issuing DRs abroad, including in IFSC, must follow the Indian framework for DR issuance (Companies Act, 2013 and the rules and schemes under it, and FEMA).
Facts: the company wants global investors and a listing in GIFT City instead of a listing in another country. A GIFT City listing does not by itself remove the Indian law requirements on issuing DRs abroad.
Analysis: DRs suit this aim. The company deposits shares with a custodian, and a depository issues DRs for listing. Two layers must be checked: the Indian DR issuance framework, and the eligibility, disclosure and listing conditions in the current IFSCA text.
Decide the programme type. The issuer must be a party to the programme and carries the disclosure duties, so a sponsored programme is the sensible route. Do not assume the company is free to choose an unsponsored programme unless the regulations confirm that such DRs are permitted.
Practical points: draft the depository agreement, the custodian arrangement and the offer document, and plan continuous disclosure.

Answer: The company can issue DRs listed on an IFSC exchange, ideally through a sponsored programme, because the issuer must be a party to the programme and bear its disclosure duties. This is subject to two layers of law: the Indian framework for DR issuance abroad (Companies Act, 2013 and the rules and schemes under it, and FEMA) and the eligibility and disclosure conditions of the IFSCA regulations. It should appoint a depository and custodian, prepare the offer document, and plan ongoing compliance.

Example 2

Sunrise Renewables Ltd plans to issue a bond labelled "green" to fund solar projects and list it in IFSC. What must it address to support the label?

Show the solution

Provision: labelled debt in the IFSC framework needs extra disclosure to back the label, in addition to normal listing requirements.
Facts: the proceeds will fund solar projects, so the stated purpose is environmental.
Analysis: the offer document should describe the eligible projects and the process to evaluate and select them. It should explain how proceeds are held and tracked, and commit to reporting on use of proceeds and impact.
Check whether an external review is required or advisable under the current IFSCA text.
Conclude with the continuing duties: periodic reports and prompt disclosure if funds are used differently.

Answer: Sunrise must disclose the project category, selection process, management of proceeds and ongoing reporting, and comply with the standard debt listing conditions. These steps support the green label and reduce greenwashing risk.

Exam tips

Write the instrument name and the parties first. It shows structure early.
Do not give section numbers unless you are certain. Name the regulation instead.
Bullet the conditions and apply each to the facts. Examiners reward the link between rule and facts.
End with continuing obligations and one practical drafting or filing step.
If asked to compare, use a short two-column style in bullets: sponsored vs unsponsored, or labelled vs plain debt.

Practice questions from Listing and Issuance of Securities

Depository Receipts and Other Instruments in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Depository Receipts and Other Instruments: frequently asked questions

How do Indian companies list directly abroad via IFSC?

They can list depository receipts on an IFSC exchange. The shares are held by a custodian and a depository issues the receipts. The company must meet IFSCA listing conditions and applicable Indian rules on overseas issue.

What is a sponsored depository receipt?

It is a DR programme in which the issuer is a party and signs an agreement with the depository. This gives the issuer a say in disclosures and investor communication. In an unsponsored DR, the depository acts without the issuer.

Can green or sustainability bonds be listed in IFSC?

Yes. The IFSC framework supports labelled debt such as green and sustainability bonds. The issuer must give extra disclosure on use of proceeds and ongoing reporting, in addition to normal listing requirements.

Do I need to remember section numbers for this topic?

No. The paper is written and case-based. Explain the rule in plain words, apply it to the facts and conclude. Cite a number only if you are fully sure of it.