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

Meera Foods Ltd, an Indian company, sells shares to the public in India and also wants cross-listed instruments in GIFT IFSC. Its CS compares a sponsored DR with an unsponsored one. Which is correct?

A sponsored DR is issued with the issuer's participation under an agreement with the depository, whereas an unsponsored DR is created without the issuer's involvement. The issuer's role is the distinguishing feature between the two types.

  1. AA sponsored DR is issued with the issuer's involvement and agreement, while an unsponsored DR is created without the issuer's participationCorrect
  2. BA sponsored DR is created by a depository without the issuer's consent, while an unsponsored one needs the issuer's agreement
  3. CBoth are identical because the issuer's role never affects DR issuance
  4. DA sponsored DR can be issued only against debt securities

Explanation

In a sponsored programme the issuer enters an agreement with the depository and takes part in the issue. Unsponsored DRs arise on the market's initiative without the issuer's participation. The second option reverses the roles, and DRs are not limited to debt.

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