Tap here to pick an attempt, marks or topic, and to sort. It makes finding questions easy!
16
December 2025Q. 6(b)5 marksSyllabus 2022
(b)List the documents required for listing approval for equity shares allotted upon conversion of FCCBs issued by the Companies.
Documents required for listing approval for equity shares allotted upon conversion of FCCBs issued by the Companies:
1.Letter of Application (i.e. by Listed companies applying for listing of further issue) duly completed. (In case of conversion of FCCBs only post allotment distribution schedule is requited to submitted).
2.Brief particular of the new securities issued as per prescribed format.
3.Certified true copy of the Board resolution in which the equity shares were allotted.
4.List of allottees and the number of equity shares allotted.
5.Shareholding Pattern as per the format prescribed under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 giving details of pre and post allotment.
6.Processing Fee [Processing fee is not payable on the first conversion, where the company has paid the same at the time of obtaining prior approval under Regulation 28(1) of the SEBI (LODR), Regulations, 2015. In case prior approval obtained after 01/04/2017, the aforesaid Processing Fees is not applicable].
7.Additional Annual Listing Fee, if applicable, on enhanced capital.
8.Confirmation by the Managing Director/ Company Secretary as per enclosed format by Exchange.
9.Certified true copy of letter issued by the overseas Stock Exchange granting listing/ trading permission to the FCCBs.
10.Certified true copy of the resolution in which the Board of the company or the Committee of Directors of the company decided to open the proposed issue of FCCBs.
11.Auditor’s Certificate confirming the floor price for the proposed issue and receipt of funds against the said issue.
12.A copy of the final offering circular (printed copy as well as pdf file on CD), duly certified by the Managing Director/ Company Secretary.
13.Detailed valuation report with related workings/calculations on the basis of which company proposes to acquire the foreign company.
application in respect of any offer document.
All pages of the /details provided should be serially numbered, stamped and certified by the authorized signatory of the company.
Source: ICSI Guideline Answers, December 2025, Q. 6(b) (Syllabus 2022).
June 2025Q. 4(b) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for June 2025.
(b)Explain the provisions governing the External Commercial Borrowing (ECB) facility available to Public Sector Oil Marketing Companies (OMCs).
ECB Facility for Oil Marketing Companies
Public Sector Oil Marketing Companies (OMCs) can raise ECB for working capital purposes with minimum average maturity period of 3 years from all recognized lenders under the automatic route without mandatory hedging and individual limit requirements. The overall ceiling for such ECBs shall be USD 10 billion or equivalent. However, OMCs should have a Board approved forex mark to market procedure and prudent risk management policy, for such ECBs. All other provisions under the ECB framework will be applicable to such ECBs.
Source: ICSI Guideline Answers, June 2025, Q. 4(b) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2025Q. 6(c) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Road show is an important phase during the preparation for an IPO. What are road shows ? How is it relevant during an IPO ?
Roadshows during IPO
Roadshows represent meetings of issuers, analysts and potential investors.Details about the company are presented in the roadshows in which prospective investors are invited lead manager by sending invitation.
Management needs to prepare for proposed Road shows and Investor Meets in advance. Adequate representation of promoters & key managerial person should be available for various meets, Road shows etc. Often there is a need to undergo training for the representatives of the Company about their conduct & behaviour during these road shows. IPO bound Companies prepare a ‘Corporate Film’ which includes brief about the Company, its past and also take investors through the present set up, practices followed by the Company, overview of proposed expansion, brief information of management, financials of the Company including various financial ratios & parameters and basis of IPO price. Besides this a short and concise ‘Press Note’ about the Company and its IPO is required to be released for publications. The Road show generally comprises of a press meet and meeting with Brokers and Investors/Analysts. ‘Press Conference’ is aimed at giving information to the press for publication in their papers/newspapers for dissemination of information to the investors whereas ‘Brokers, Investors/Analysts Meet’ aims at giving detailed information to the market participants about the Company enabling them to understand the details and take it further to the ultimate investors. Many a time, IPO bound Companies also organize ‘site/plant visit’ for the market participants enabling them to take a view of manufacturing facilities and other administrative set up of the Company. Managements are required to take into consideration all the above factors while preparing for marketing of an IPO.
Source: ICSI Guideline Answers, June 2025, Q. 6(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2025Q. 5(b)5 marksSyllabus 2022Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for June 2025.
(b)Globalisation has opened doors and opportunities that were never explored before. International Financing is also known as International Macroeconomics as it deals with finance on a global level.
In the light of above statements, explain the importance of External Commercial Borrowing (ECB). Which are the areas where the ECB proceeds can be parked ?
Importance of External Commercial Borrowing (ECB)
ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted enduses, maximum all-in-cost ceiling, etc. The parameters apply in totality and not on a standalone basis. ECBs are either in freely convertible foreign currencies or in Indian rupees. It will be in the form of loans/equities/debts.
Parking of ECB proceeds
ECB proceeds are permitted to be parked abroad as well as domestically in the manner given below:
a)Parking of ECB proceeds abroad
ECB proceeds meant only for foreign currency expenditure can be parked abroad pending utilization. Till utilisation, these funds can be invested in the following liquid assets (a) deposits or Certificate of Deposit or other products offered by banks rated not less than AA (-) by Standard and Poor/ Fitch IBCA or Aa3 by Moody’s; (b) treasury bills and other monetary instruments of one-year maturity having minimum rating as indicated above and (c) deposits with foreign branches/ subsidiaries of Indian banks abroad.
b)Parking of ECB proceeds domestically
ECB proceeds meant for Rupee expenditure should be repatriated immediately for credit to their Rupee accounts with AD Category I banks in India. ECB borrowers are also allowed to park ECB proceeds in term deposits with AD Category I banks in India for a maximum period of 12 months cumulatively. These term deposits should be kept in unencumbered position.
Source: ICSI Guideline Answers, June 2025, Q. 5(b) (Syllabus 2022).
December 2024Q. 4(c) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Several approvals are required for Issuance of ADRs/GDRs. Prepare the list of such approvals.
Several approvals are required for Issuance of ADRs/ GDRs. A list of such approvals are as under:
•Approval of Board of Directors
•Approval of Shareholders
•Approval of Ministry of Finance ‘In-Principle and Final’
•In-Principle consent of stock exchange for listing of underlying shares
•In-Principle consent of Financial Institutions
Source: ICSI Guideline Answers, December 2024, Q. 4(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2024Q. 5(d) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(d)Prepare a checklist of documents required for granting approval under SEBI (LODR) Regulations, 2015, for companies proposing to issue GDRs/ADRs/FCCBs.
Documents required for granting approval under Regulation 28(1) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, for companies proposing to come out with issue of GDRs/ADRs/FCCB are as under:
1.Certified true copy of the resolution passed by the board approving the issue;
2.Copy of meeting notice sent to shareholders;
3.Certified true copy of the resolution passed by the shareholders’ meeting approving the issue;
4.Draft offer circular for the issue;
5.Confirmation by the MD and /or company secretary;
6.Processing fee.
Source: ICSI Guideline Answers, December 2024, Q. 5(d) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2024Q. 6(a) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
( a )Discuss the process of listing of GDRs on the Euro MTF.
Listing of GDRs on the Euro MTF will require submission of a prospectus to Luxembourg Stock Exchange (LuxSE). Once your prospectus has been reviewed and approved, your GDR will be listed and admitted to trading.
•Choose a listing agent: It is not mandatory to appoint a listing agent. Either the issuer itself or a Company acting on its behalf can submit request for approval.
•Listing requirement: In order to list on the Euro MTF, a security must fulfil the following criteria, among other things:
•Minimum Capital of ₹ 10,00,000 or equivalent value in other currencies
•Minimum public free float of 25%
•Securities should be eligible for clearing and settlement
•Securities should be freely negotiable and fungible
•Listing Process:
File a prospectus: To begin the listing process, the following documents to be sent on LuxSE
•A copy of your prospectus
•Application form
•Undertaking letter
•Article of association
•Existing agreement /Conventions
•The last three annual financial reports (if published)
Prospectus review : A first set of comments on a complete draft prospectus will be sent to you within a maximum period of three business days from the date of receipt of the filed application.
Additional comments following submission of an updated draft prospectus will be provided within a maximum of two business days after submission.
Final submission: Listing can take place after receipt of the following items:
1.Final version of the prospectus
2.First listing price
•Fees: All fees are paid to LuxSE and priced in euros.
•Continuing Obligations: After listing and admission to trading, issuers must fulfil specific reporting obligations. E.g. issuers must file information and scheduled corporate events with LuxSE.
•LEl code: The LuxSE is obliged to collect a ‘Legal Entity Identifier’ or LEI Code from any issuer operating on its regulated market and on Multilateral Trading Facility (Euro MTF) & communicate it to the relevant supervisory authorities.
Source: ICSI Guideline Answers, December 2024, Q. 6(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2024Q. 6A(iii)5 marksSyllabus 2022
(iii)A multinational technology company is planning to raise funds through the issuance of Global Depository Receipts to expand its operations in the European market. The company’s legal team is in the process of drafting the “Offering Circular”.
What specific contents and information must be included in the “Offering Circular” to ensure that prospective investors have all the necessary details to form their investment strategies ?
“Offering Circular” is a mirror through which the prospective investors can access vital information regarding the company in order to form their investment strategies. It is to be prepared very carefully giving true and complete information regarding the financial strength of the company, its past performance, past and envisaged research and business promotion activities, track record of promoters and the company, ability to trade the securities in the European capital market. The Offering Circular should be very comprehensive to take care of overall interests of the prospective investor.
The Offering Circular for Euro-issue offering should typically cover the following contents:
•Background of the company and its promoters including date of incorporation and objects, past performance, production, sales and distribution network, future plans, etc.
•Capital structure of the company-existing, proposed and consolidated.
•Deployment of issue proceeds.
•Financial data indicating track record of consistent profitability of the company.
•Group investments and their performance including subsidiaries, joint venture in India and abroad.
•Investment considerations.
•Description of shares.
•Terms and conditions of global depository receipt and any other instrument issued.
•Economic and regulatory policies of the Government of India.
•Details of Indian securities market indicating stock exchange, listing requirements, foreign investments in Indian securities.
•Market price of securities.
•Dividend and capitalisation.
•Securities regulations and exchange control.
•Tax aspects indicating analysis of tax consequences under Indian law of acquisition, membership and sale of shares, treatment of capital gains tax, etc.
•Status of approvals required to be obtained from Government of India.
•Summary of significant differences in Indian GAAP, UK GAAP and US GAAP and expert’s opinion.
•Report of statutory auditor.
•Subscription and sale.
•Transfer restrictions in respect of instruments.
•Legal matters etc.
•Other general information not forming part of any of the above.
If listed, a copy of the Offering Circular is required to be sent to the Registrar of Companies, SEBI and the Indian Stock Exchanges for record purposes.
***
Source: ICSI Guideline Answers, December 2024, Q. 6A(iii) (Syllabus 2022).
June 2024Q. 3(a) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
( a )Briefly explain the following in relation to the issue of ADR (American Depository Receipts) & GDR (Global Depository Receipts) as per provision under companies (Issue of Global Depository Receipts) Rules, 2014 :
(i)Two-Way Fungibility Scheme
(ii)Sponsored ADR/GDR Issue.
(i)Two-Way Fungibility Scheme
Under two-way Fungibility Scheme, a stock broker in India, registered with SEBI, can purchase shares of an Indian company from the market for conversion into ADRs/GDRs based on instructions received from overseas investors. Re-issuance of ADRs / GDRs would be permitted to the extent of ADRs / GDRs which have been redeemed into underlying shares and sold in the Indian market.
It means that the shares so released can be reconverted by the company into DRs for purchase by the overseas investors. It implies that the re-issuance of DRs would be permitted to the extent of DRs that have been redeemed and underlying shares are sold in domestic market.
(ii)Sponsored ADR/GDR Issue
An Indian company can also sponsor an issue of ADR / GDR. Under this mechanism, the company offers its resident shareholders a choice to tender their shares back to the company so that on the basis of such shares, ADRs/GDRs can be issued abroad. The proceeds of the ADR / GDR issue are remitted back to India and distributed among the resident investors who had offered their Rupee denominated shares for conversion.
These proceeds can be kept in Resident Foreign Currency (Domestic) accounts in India by the resident shareholders who have tendered such shares for the purpose of the issue of ADRs / GDRs.
Source: ICSI Guideline Answers, June 2024, Q. 3(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2024Q. 4(a) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for June 2024.
( a )External Commercial Borrowing (ECB) can be made only for permitted purposes as per FEMA guidelines. What is ECB ? Also mention the negative list for which ECB proceeds cannot be utilized.
External Commercial Borrowing (ECB) are commercial loans raised by eligible resident entities from recognised non- resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end uses, maximum ceiling etc. The parameters apply in totality and not on a standalone basis.
The ECB Policy issued by RBI stipulate the negative list for which the ECB proceeds cannot be utilized and includes the following:
a)Real estate activities
b)Investment in capital market
c)Equity investment
d)Working capital purposes and General corporate purposes except in the following cases:
i)ECB raised from foreign equity holder for working capital purposes, general corporate purposes or for repayment of Rupee loans for Minimum Average Maturity Period of 5 years
ii)ECB raised for working capital purposes or general corporate purposes and on-lending by NBFCs for working capital purposes or general corporate purposes for Minimum Average Maturity Period of 10 years
e)Repayment of rupee loans except in the following cases:
(i)repayment of Rupee loans availed domestically for capital expenditure and on-lending by NBFCs for the same purpose
(ii)repayment of Rupee loans availed domestically for purposes other than capital expenditure and on-lending by NBFCs for the same purpose
f)On-lending to entities for the above activities in case of ECB raised by NBFCs as given in point
(d)(e) and (f) above.
Source: ICSI Guideline Answers, June 2024, Q. 4(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2024Q. 4(c) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Several agencies/intermediaries are involved in the issue of ADRs/GDRs. Prepare the list of the agencies normally involved in the said issue.
The following agencies/intermediaries are normally involved in the issue of ADRs/GDRs.
(i)Lead Manager : The issues related to public or private placement, nature of investment, coupon rate on bonds and conversion price are to be decided in consultation with the lead manager.
(ii)Co-Lead/Co-Manager: In consultation with the lead manager, the company has to appoint co-lead/co-manager to coordinate with the issuing company/lead manager to make the smooth launching of the issue.
(iii)Overseas Depository Bank: It is the bank which is authorised by the issuing company to issue Depository Receipts against issue of ordinary shares or Foreign Currency Convertible Bonds of issuing company.
(iv)Domestic Custodian Bank: A banking company which acts as custodian for the ordinary shares or Foreign Currency Convertible Bonds of an Indian company, which are issued by it. The function of the domestic custodian bank is to co-ordinate with the depository bank.
(v)Listing Agent: The appointment of listing agent is necessary to coordinate with issuing company for listing the securities on Overseas Stock Exchanges.
(vi)Legal Advisors: The issuing company should appoint legal advisors who will guide the company and the lead manager to prepare offer document, depository agreement, indemnity agreement and subscription agreement.
(vii)Printers: The issuing company should appoint printers of international repute for printing Offer Circular.
(viii)Auditors: The role of issuer company’s auditors is to prepare the auditor’s report for inclusion in the offer document, provide requisite comfort letters and reconciliation of the issuer company’s accounts between Indian GAAP/UK GAAP/US GAAP and identify significant differences.
(ix)Underwriters : It is desirable to get the issue underwritten by banks and syndicates. Usually, the underwriters subscribe for a portion of the issue with arrangements for tie-up for the balance with their clients.
Source: ICSI Guideline Answers, June 2024, Q. 4(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2024Q. 6(c)5 marksSyllabus 2022
(c)Discuss various factors to be considered by the management of a company for a successful Road Show while preparing for marketing of an IPO.
Roadshows represent meetings of issuers, analysts, intermediaries and potential investors. Details about the company are presented in the roadshows and such details usually include the following information about the company making the issue:
•History
•Organisational structure
•Principal objects
•Business lines
•Position of the company in Indian and International Market
•Past performance of the company
•Future plans of the company
•Competition – domestic as well as foreign
•Financial results and operating performance
•Valuation of shares
•Review of Indian stock market and economic situations.
Thus, at road shows, series of information presentations are organised in selected cities around the world with analysts and potential institutional investors. It is, in fact, a conference by the issuer with the prospective investors.
During road shows, the investors give indication of their willingness to buy a particular quantity at particular terms. Their willingness is booked as orders by the marketing force of lead manager and co-lead manager. This process is known as book building.
A road show generally arranged by the lead manager by sending invitation to all prospective investors.
Source: ICSI Guideline Answers, June 2024, Q. 6(c) (Syllabus 2022).
June 2023Q. 2A(i) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(i)Explain the differences between abbreviations "ADR" and "GDR".
Typically, companies in India issue securities in the form of depository receipts (DR) viz. American Depository Receipts (ADR), Global Depository Receipts (GDR) etc. Both ADRs and GDRs are equity based instruments. "American Depository Receipt (ADR)" means a security issued by a bank or a depository in United States of America (USA) against underlying rupee shares of a company incorporated in India.
"Global Depository Receipt (GDR)" means a security issued by a bank or a depository outside India (other than the United States of America) against underlying rupee shares of a company incorporated in India (E.g. DRs issued on the Luxembourg Stock Exchange). The difference between American Depository Receipts (ADR) and Global Depository Receipts (GDR) is that ADRs are US $ denominated and traded only in US while GDRs are traded in various places such as London Stock Exchange.
Source: ICSI Guideline Answers, June 2023, Q. 2A(i) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2022Q. 3(c) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Speed Information Ltd. would like to issue US $ 750 million Global Depository Receipts (GDRs) for setting up cloud computing services. Managing Director of the company requests you as a Company Secretary to prepare a checklist for the issue of Depository Receipts. Prepare a checklist considering conditions to be fulfilled by a company as per the provisions of Companies (Issue of Global Depository Receipts) Rules, 2014.
Conditions to be fulfilled by a company for issue of depository receipts as per the provisions of Companies (Issue of Global Depository Receipts) Rules, 2014 are as under:
Rule - 3
•A company may issue depository receipts provided it is eligible to do so in terms of the Scheme and relevant provisions of the Foreign Exchange Management Rules and Regulations and amendment thereto.
Rule - 4
•The Board of Directors of the company intending to issue depository receipts shall pass a resolution authorising the company to do so.
•The company shall take prior approval of its shareholders by a special resolution to be passed at a general meeting.
However, a special resolution passed under section 62 of Companies Act 2013 for issue of shares underlying the depository receipts, shall be deemed to be a special resolution for the purpose of section 41 of the Companies Act 2013 as well.
•The depository receipts shall be issued by an overseas depository bank appointed by the company and the underlying shares shall be kept in the custody of a domestic custodian bank.
•The company shall ensure that all the applicable provisions of the Scheme and the rules or regulations or guidelines issued by the Reserve Bank of India are complied with before as well as after the issue of depository receipts.
•The company shall appoint a merchant banker or a practising chartered accountant or a practising cost accountant or a practising company secretary to oversee all the compliances relating to issue of depository receipts and the compliance report taken from any of the above persons so appointed shall be placed at the meeting of the Board of Directors of the company or of the committee of the Board of directors authorised by the Board in this regard to be held immediately after closure of all formalities of the issue of depository receipts.
However, the committee of the Board of Directors referred to above shall have at least one independent director in case the company is required to have independent directors.
Rule - 5
•The depository receipts can be issued by way of public offering or private placement or in any other manner prevalent abroad and may be listed or traded in an overseas listing or trading platform.
•The depository receipts may be issued against issue of new shares or may be sponsored against shares held by shareholders of the company in accordance with such conditions as the Central Government or Reserve Bank of India may prescribe or specify from time to time.
•The underlying shares shall be allotted in the name of the overseas depository bank and against such shares, the depository receipts shall be issued by the overseas depository bank abroad.
Rule - 6
•A holder of depository receipts may become a member of the company and shall be entitled to vote as such only on conversion of the depository receipts into underlying shares after following the procedure provided in the Scheme and the provisions of this Act.
•Until the conversion of depository receipts, the overseas depository shall be entitled to vote on behalf of the holders of depository receipts in accordance with the provisions of the agreement entered into between the depository, holders of depository receipts and the company in this regard.
Rule - 7
•The proceeds of issues of depository receipts shall either be remitted to a bank account in India or deposited in an Indian bank operating abroad or in any foreign bank (which is a Scheduled Bank under the Reserve Bank of India Act, 1934) having operations in India with an agreement that the foreign bank having operations in India shall take responsibility for furnishing all the information which may be required and in the event of a sponsored issue of Depository Receipts. In case of a sponsored issue of Depository Receipts, the proceeds of the sale shall be credited to the respective bank accounts of the shareholders.
Source: ICSI Guideline Answers, June 2022, Q. 3(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2022Q. 4(c) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for June 2022.
(c)Explain in brief manner of parking of ECB proceeds abroad & domestically.
ECB proceeds are permitted to be parked abroad as well as domestically in the manner given below:
Parking of ECB proceeds abroad : ECB proceeds meant only for foreign currency expenditure can be parked abroad pending utilization. Till utilisation, these funds can be invested in the following liquid assets
(i)Deposits or Certificate of Deposit or other products offered by banks rated not less than AA (-) by Standard and Poor/ Fitch IBCA or Aa3 by Moody's;
(ii)Treasury bills and other monetary instruments of one-year maturity having minimum rating as indicated above; and
(iii)Deposits with foreign branches/ subsidiaries of Indian banks abroad.
Parking of ECB proceeds domestically : ECB proceeds meant for Rupee expenditure should be repatriated immediately for credit to their Rupee accounts with AD Category I banks in India. ECB borrowers are also allowed to park ECB proceeds in term deposits with AD Category I banks in India for a maximum period of 12 months cumulatively. These term deposits should be kept in unencumbered position.
Source: ICSI Guideline Answers, June 2022, Q. 4(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2021Q. 3(c) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for December 2021.
(c)Outline the reporting requirements under External Commercial Borrowing (ECB) reporting framework.
Reporting Requirements under External Commercial Borrowings (ECB) Reporting Framework
Borrowings under ECB Framework are subject to following reporting requirements apart from any other specific reporting required under the framework:
•Loan Registration Number (LRN) : Any draw-down in respect of an ECB should happen only after obtaining the LRN from the Reserve Bank. To obtain the LRN, borrowers are required to submit duly certified Form ECB, which also contains terms and conditions of the ECB, in duplicate to the designated AD Category I bank. In turn, the AD Category I bank will forward one copy to the Reserve Bank of India. However, copies of loan agreement for raising ECB are not required to be submitted to the Reserve Bank.
•Changes in terms and conditions of ECB : Changes in ECB parameters in consonance with the ECB norms, including reduced repayment by mutual agreement between the lender and borrower, should be reported to the RBI through revised Form ECB at the earliest, in any case not later than 7 days from the changes effected. While submitting revised Form ECB the changes should be specifically mentioned in the communication.
•Monthly Reporting of actual transactions : The borrowers are required to report actual ECB transactions through Form ECB 2 Return through the AD Category I bank on monthly basis so as to reach Department of Statistics and Information Management (DSIM) within seven working days from the close of month to which it relates. Changes, if any, in ECB parameters should also be incorporated in Form ECB 2 Return.
•Late Submission Fee (LSF) for delay in reporting : Any borrower, who is otherwise in compliance of ECB guidelines, can regularize the delay in reporting of drawdown of ECB proceeds before obtaining LRN or delay in submission of Form ECB 2 returns, by payment of late submission fees.
•Standard Operating Procedure (SOP) for Untraceable Entities : The required SOP has to be followed by designated AD Category-I banks in case of untraceable entities who are found to be in contravention of reporting provisions for ECBs by failing to submit prescribed return(s) under the ECB framework, either physically or electronically, for past eight quarters or more.
Source: ICSI Guideline Answers, December 2021, Q. 3(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2021Q. 4(e) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for December 2021.
(e)‘‘The External Commercial Borrowings (ECB) proceeds can be parked abroad.’’ Explain.
The External Commercial Borrowings (ECB) proceeds are permitted to be parked abroad in a prescribed manner. ECB proceeds meant only for foreign currency expenditure can be parked abroad pending utilization. Till utilisation, these funds can be invested in the following liquid assets:
•deposits or Certificate of Deposit or other products offered by banks rated not less than AA(-) by Standard and Poor/ Fitch IBCA or Aa3 by Moody;
•treasury bills and other monetary instruments of one-year maturity having minimum rating as indicated above; and
•deposits with foreign branches/ subsidiaries of Indian banks abroad.
PART B
Source: ICSI Guideline Answers, December 2021, Q. 4(e) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2021Q. 6(c) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Explain the process of listing GDRs on the Euro MTF.
The Luxembourg Stock Exchange (LuxSE) offers a choice of two markets, the main EU-regulated market (called "the BdL market" or the Bourse de Luxembourg market") and an exchange-regulated market (called "the Euro MTF")
When listing on the Euro MTF (Multilateral Trading Facility) market, the Luxembourg Stock Exchange is in charge of prospectus approval and the prospectus is drawn up according to the rules and regulations.
Listing on the Euro MTF will require submission of a prospectus to LuxSE. Once your prospectus has been reviewed and approved, your share or GDR will be listed and admitted to trading.
•Choose a listing agent (optional) : It is not mandatory to appoint a listing agent. Either the issuer itself or a company acting on its behalf can submit requests for approval.
•Listing Requirements : In order to list on the Euro MTF, a security must fulfil the following criteria, among other things:
— Minimum capital of €1,000,000, or equivalent value in other currencies
— Minimum public free float of 25%
— Securities should be eligible for clearing and settlement
— Securities should be freely negotiable and fungible
•Listing Process :
-File a prospectus : To begin the listing process, the following documents to be sent to LuxSE:
o
A copy of the prospectus of issuer;
o
Application form
o
Undertaking letter
o
Articles of association
o
Existing agreements/conventions
o
The last three annual financial reports (if published)
-Prospectus review : A first set of comments on a complete draft prospectus will be sent to you within a maximum period of three business days from the date of receipt of the filed application. Additional comments following submission of an updated draft prospectus will be provided within a maximum of two business days after submission.
-Final submission : Listing can take place after receipt of the following items:
1.Final version of the prospectus
2.First listing price
•Fees : All fees are to be paid to LuxSE and are priced in euros. The fee structure will vary depending on whether or not issuer is a "recently established company", i.e. a company that has not published or registered annual accounts for the three previous financial years.
•Continuing Obligations : After listing and admission to trading, issuers must fulfil specific reporting obligations. For example, issuers must file information and scheduled corporate events with LuxSE.
•LEI Code : In the context of Markets in Financial Instruments Directive (MiFID II) / Markets in Financial Instruments Regulation (MiFIR) and the Market Abuse Regulation (MAR), the LuxSE is obliged to collect a 'Legal Entity Identifier' or 'LEI' code from any issuer operating on its regulated market (Bourse de Luxembourg) and on its Multilateral Trading Facility (Euro MTF) and communicate it to the relevant supervisory authorities.
Source: ICSI Guideline Answers, December 2021, Q. 6(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2021Q. 4(c) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Mention the Regulatory Framework in India for Issue of ADR/GDR/FCCBs/ FCEBs.
Capital can be raised from international capital market in foreign currency by accessing foreign capital market. Funds raised through foreign currency are called as euro equity or debt. Indian companies are allowed to raise capital in the international market through the issue of GDR/ADR/FCCB/FCEB and through External Commercial Borrowings.
Issuance of ADR/GDR/FCCBs/FCEBs are regulated by the following regulations in India:
•Notifications/Circulars issued by Ministry of Finance (MoF), GOI.
•Consolidated FDI Policy.
•RBI Regulations/Circulars.
•Companies Act and Rules thereunder.
•SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Source: ICSI Guideline Answers, June 2021, Q. 4(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2021Q. 6A(iv) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(iv)Discuss the various parameters to be covered for a successful Road Show for raising funds via an IPO.
At road shows, generally series of information presentations are organised in selected cities around the world with analysts and potential institutional investors. It is, in fact, a conference by the issuer with the prospective investors. Road show is arranged by the lead manager by sending invitation to all prospective investors.
Management needs to prepare for proposed Road shows and Investor Meets in advance. Adequate representation of promoters & key managerial person should be available for various meets, Road shows etc. Often there is a need to undergo training for the representatives of the Company about their conduct & behaviour during these road shows. IPO bound Companies prepare a 'Corporate Film' which includes brief about the Company, its past and also take investors through the present set up, practices followed by the Company, overview of proposed expansion, brief information of management, financials of the Company including various financial ratios & parameters and basis of IPO price. Besides this a short and concise Press Note about the Company and its IPO is required to be released for publications. The Road show generally comprises of a press meet and meeting with Brokers and Investors/Analysts. Press Conference is aimed at giving information to the press for publication in their papers/newspapers for dissemination of information to the investors whereas 'Brokers, Investors/Analysts Meet' aims at giving detailed information to the market participants about the Company enabling them to understand the details and take it further to the ultimate investors. Many a times IPO bound Companies also organize site/plant visit for the market participants enabling them to take a view of manufacturing facilities and other administrative set up of the Company. Managements are required to take into consideration all the above factors while preparing for marketing of an IPO.
***
Source: ICSI Guideline Answers, June 2021, Q. 6A(iv) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2020Q. 3(a) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for December 2020.
(a)State the conditions pertaining to conversion of External Commercial Borrowings (ECBs) into Equity.
Conditions for converting ECBs into Equity
Conversion of ECBs into Equity is permitted (including those which are matured but unpaid) subject to the following conditions:
(i)The activity of the borrowing company is covered under the automatic route for FDI or approval route from the Foreign Investment Promotion Board, wherever applicable, for foreign equity participation has been obtained as per the extant FDI policy.
(ii)The conversion, which should be with the lender’s consent without any additional cost, will not result in breach of applicable sector cap on the foreign equity holding.
(iii)Applicable Pricing guidelines of RBI should be fulfilled.
(iv)If borrower concerned has availed of other credit facilities from the Indian banking system, including overseas branches/ subsidiaries, the applicable prudential guidelines issued by the Department of Banking Regulation of RBI, including guidelines on restructuring are compelled with,
(v)Consent of other lenders, if any, to the same borrower is available or at least information regarding conversion is exchanged with other lenders of the borrower.
(vi)In-principle approval of the Stock Exchange where equity shares of the borrower is listed is required before issuance of ECB(FCCBs) which has conversion options.
(vii)Post conversion of ECBs into equity shares, the listing and trading permission is to be obtained from the Stock Exchange where its equity shares are listed
Source: ICSI Guideline Answers, December 2020, Q. 3(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2020Q. 4(a) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(a)What do you mean by Foreign Currency Exchangeable Bonds (FCEB) ? Explain the pricing norms for issuing of FCEB under the Foreign Currency Exchangeable Bonds Scheme, 2008.
Indian promoters can raise money abroad by issuing foreign currency bonds against the value of their investments in shares of listed groups company, termed as Foreign Currency Exchangeable Bonds (FCEB). The issue of these bonds helps the promoter to meet the financing requirements within the group. Issue of FCEBs are governed by Foreign Currency Exchangeable Scheme, 2008 issued by Ministry of Finance, Department of Economic Affairs. According to the “Issue of Foreign Currency Exchangeable Bonds (FCEBs) Scheme, 2018, FCEB means :
-a bond expressed in foreign currency.
-the principal and the interest in respect of which is payable in foreign currency.
-issued by an issuing company, being an Indian company.
-subscribed to by a person resident outside India.
-Exchangeable into equity shares of another company, being Offered Company in any manner .
Pricing of Foreign Currency Exchangeable Bonds (FCEBs)
At the time of issuance of FCEB the exchange price of the offered listed equity shares shall not be less than the higher of the two:-
(i)the average of the weekly high and low of the closing prices of the shares of the offered company quoted on the stock exchange during the six months.
(ii)the average of weekly high and low of the closing prices of the shares of the offered company quotes on a stock exchange during the two weeks preceding the relevant date.
Source: ICSI Guideline Answers, December 2020, Q. 4(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2019Q. 3(c) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)State the procedure laid out for issuance of ADRs/GDRs.
Following are the procedure for the issuance of ADRs/GDRs
(i)Approvals Required
The issue of ADRs/GDRs requires the approval of a Board of Directors, shareholders, ”In principle and Final” approval of Ministry of Finance, approval of Reserve Bank of India, In-principle consent of Stock Exchange for listing of underlying shares and In-principle consent of Financial institutions.
(ii)Approval of Board of Directors
A meeting of Board of Directors is required to be held for approving the proposal to rais se money from Euro Capital market. A board resolution is to be passed to approve the raising of finance by issue of GDRs/FCCBs. The resolution should indicate therein specific purposes for which funds are required, quantum of the issue, country in which issue is to be launched, time of the issue etc. A director/Sub- Committee of Board of Directors is also to be authorised for seeking Government approval in connection with Euro issue and signing agreements with depository, organising road shows for fixation of price of GDRs. The Board meeting shall also decide and approve the notice of Extraordinary general meeting of shareholders at which special resolution is to be considered.
(iii)Approval of Shareholders
Proposal for making Euro issue, as proposed by Board of Directors require approval of shareholders. A special resolution under Section 62 of the Companies Act, 2013 is required to be passed at a duly convened general meeting of the shareholders of the company
(iv)Approval of Ministry of Finance - "In Principle and Final"
With respect to ADR/GDR, guidelines issued on the subject dated 19-1-2000 brought ADR/GDR under the automatic route and therefore the requirement of obtaining approval of Ministry of Finance, Department of Economic Affairs has been dispersed with.
Further, private placement of ADR/GDR will also not require prior approval provided the issue is managed by investment banker.
(v)In-Principle Consent of Stock Exchanges for Listing of Underlying Shares
The issuing company has to make a request to the domestic stock exchange for in-principle consent for listing of underlying shares which shall be lying in the custody of domestic custodian. These shares, when released by the custodian after cancellation of GDR, are traded on Indian stock exchanges like any other equity shares.
(vi)In-Principle Consent of Financial Institutions
Where term loans have been obtained by the company from the financial institutions, the agreement relating to the loan contains a stipulation that the consent of the financial institution has to be obtained. The company must obtain in-principle consent on the broad terms of the proposed issue.
Source: ICSI Guideline Answers, December 2019, Q. 3(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2019Q. 5(b) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(b)Explain briefly the Professional Securities Market and the provisions relating to listing of Depository Receipts thereon.
The Professional Securities Market is an innovative, specialised market designed to suit the specific needs of issuers. It facilitates the raising of capital through the issue of specialist debt securities or depositary receipts (DRs) to professional investors.
Companies wishing to raise capital may do so without the additional cost of following a retail or equity regime. As a listed, exchange-regulated market, the Professional Securities Market enables issuers to enjoy the benefits of a flexible and pragmatic approach to regulatory requirements.
Issuers of debt or DRs are not required to report historical financial information to IFRS or an equivalent standard, either in listing documents or as a continuing obligation. Instead, issuers can use their domestic accounting standards.
Listing of Depository Receipts on the Professional Security Market
DRs are typically held in US dollars and issued by a depository bank. Several forms of DRs can be listed and traded in London, including Global Depositary Receipts (GDRs) and American Depository Receipts (ADRs).
Admitting DRs to the PSM involves a two-step, simultaneous process. A company submits its ‘Listing Particulars’ to the UKLA, while also applying to the Exchange for admission of its DRs to trading on the PSM.
Trading platform : All DRs admitted to the PSM are traded on the International Order Book (IOB), the world’s leading electronic order book for DRs.
Source: ICSI Guideline Answers, December 2019, Q. 5(b) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2019Q. 6(c) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(c)Explain the requirements and process for listing of Shares/GDRs on the Euro MTF.
Listing on the Euro MTF will require submission of a prospectus to LuxSE. Once your prospectus has been reviewed and approved, your share or GDR will be listed and admitted to trading.
•Choose a listing agent (optional) : It is not mandatory to appoint a listing agent. Either the issuer itself or a company acting on its behalf can submit requests for approval.
•Listing Requirements : In order to list on the Euro MTF, a security must fulfil the following criteria, among other things:
— Minimum capital of €1 ,000,000, or equivalent value in other currencies — Minimum public free float of 25% — Securities should be eligible for clearing and settlement — Securities should be freely negotiable and fungible
•Listing Process
File a prospectus: To begin the listing process, the following documents to be sent to LuxSE:
1.A copy of your prospectus;
2.Application form
3.Undertaking letter
4.Articles of association
5.Existing agreements/conventions
6.The last three annual financial reports (if published)
— Prospectus review: A first set of comments on a complete draft prospectus will be sent to you within a maximum period of three business days from the date of receipt of the filed application.
Additional comments following submission of an updated draft prospectus will be provided within a maximum of two business days after submission.
— Final submission: Listing can take place after receipt of the following items:
1.Final version of the prospectus
2.First listing price
•Fees : All fees are to be paid to LuxSE and are priced in euros. The fee structure will vary depending on whether or not you are a "recently established company", i.e. a company that has not published or registered annual accounts for the three previous financial years.
•Continuing Obligations : After listing and admission to trading, issuers must fulfil specific reporting obligations. For example, issuers must file information and scheduled corporate events with LuxSE.
•LEI Code : In the context of MiFlD Il / MiFIR and MAR, the LuxSE is obliged to collect a 'Legal Entity Identifier' or 'LEI' code from any issuer operating on its regulated market (Bourse de Luxembourg) and on its Multilateral Trading Facility (Euro MT F) and communicate it to the relevant supervisory authorities.
Source: ICSI Guideline Answers, December 2019, Q. 6(c) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2019Q. 2(a) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017Law changed
Law changed after this attempt: The Reserve Bank of India revised the ECB framework on 16 February 2026, changing eligible borrowers, recognised lenders, the borrowing limit (USD 1 billion or 300% of net worth), the minimum average maturity and the rules on parking and use of proceeds, so the conditions in this answer may no longer apply. (ICSI Supplement, SMCF, December 2026). The answer below reflects the law as it stood for June 2019.
(a)What do you mean by ECB ? Under what circumstances conversion of ECB’s into equity is possible ?
ECBs are commercial loans raised by eligible resident entities from recognised nonresident entities and should confirm to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The parameters apply in totality and not on a standalone basis. Conversion of ECBs into equity is permitted (including those which are matured but unpaid) subject to the following conditions:
(1)The activity of the borrowing company is covered under the automatic route for FDI or approval route from the Foreign Investment Promotion Board (FIPB), wherever applicable, for foreign equity participation has been obtained as per the extant FDI policy.
(2)The conversion, which should be with the lender’s consent and without any additional cost, will not result in breach of applicable sector cap on the foreign equity holding.
(3)Reporting requirements should be fulfilled;
(4)Applicable pricing guidelines for shares are complied with.
(5)Consent of other lenders, if any.
(6)If the borrower concerned has availed of other credit facilities from the Indian banking system the applicable prudential guidelines issued by RBI are complied with.
Source: ICSI Guideline Answers, June 2019, Q. 2(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2019Q. 4(a) (CFLSE)3 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(a)Discuss the different modes of Euro Issue in detail.
Euro issue means modes of raising funds by an Indian company outside India in foreign currency. There are different modes of Euro issue which is as follows: