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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Instruments, Laws and Procedures

Which statement correctly distinguishes Indian Depository Receipts (IDRs) from GDRs issued by an Indian company?

IDRs are offered in India by a company incorporated outside India, whereas GDRs are issued in foreign countries by an Indian company. Section 390 covers IDRs and applies whether or not the foreign company has a place of business in India, while section 41 covers Indian companies' foreign depository receipts.

  1. AIDRs are offered in India by a company incorporated outside India, while GDRs are issued abroad by an Indian companyCorrect
  2. BIDRs are issued abroad by an Indian company, while GDRs are offered in India by a foreign company
  3. CBoth are issued in India by Indian companies only
  4. DIDRs can be offered only by a foreign company that has a place of business in India

Explanation

Section 390 deals with offer of IDRs by a company incorporated or to be incorporated outside India, whether or not it has a place of business in India. Section 41 deals with Indian companies issuing depository receipts in a foreign country. The option requiring a place of business is wrong since the section says it does not matter.

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