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Consider the following statements about Indian Depository Receipts.
1. IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.
2. In an IDR, foreign companies would issue shares to an Indian depository, which would in turn issue depository receipts to investors in India.
3. The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorise the Indian depository to issue of IDRs
Which of these statements is/are correct?
  • a)
    1 and 2 Only
  • b)
    2 and 3 Only
  • c)
    1 and 3 Only
  • d)
    All of them
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements about Indian Depository Receipts. 1...
Indian Depository Receipts (IDRs)

Statement 1: IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.

This statement is correct. Indian Depository Receipts (IDRs) are financial instruments that are created by Indian depositories against the underlying equity shares of the issuing company. IDRs are similar to Global Depository Receipts (GDRs) and American Depository Receipts (ADRs), but they are specifically issued in the Indian market.

Statement 2: In an IDR, foreign companies would issue shares to an Indian depository, which would in turn issue depository receipts to investors in India.

This statement is correct. In the case of IDRs, foreign companies issue shares to an Indian depository. The Indian depository then issues depository receipts to investors in India. These depository receipts represent the ownership of the underlying equity shares of the foreign company.

Statement 3: The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorize the Indian depository to issue IDRs.

This statement is correct. The actual shares underlying IDRs are held by an Overseas Custodian. The Overseas Custodian is responsible for safekeeping the shares and authorizes the Indian depository to issue the IDRs in the Indian market. The Indian depository acts as an intermediary between the foreign company and the Indian investors.

Conclusion:
All three statements are correct. Indian Depository Receipts (IDRs) are created by Indian depositories against the underlying equity shares of foreign companies. The actual shares are held by an Overseas Custodian, and the Indian depository issues depository receipts to investors in India. IDRs provide Indian investors with an opportunity to invest in foreign companies without directly holding the shares of those companies.
Community Answer
Consider the following statements about Indian Depository Receipts. 1...
  • As per the definition given in the Companies (Issue of Indian Depository Receipts) Rules, 2004, IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.
  • In an IDR, foreign companies would issue shares, to an Indian depository [say the National Security Depository Limited (NSDL)], which would in turn issue depository receipts to investors in India.
  • The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorise the Indian depository to issue IDRs.
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Consider the following statements about Indian Depository Receipts. 1. IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.2. In an IDR, foreign companies would issue shares to an Indian depository, which would in turn issue depository receipts to investors in India.3. The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorise the Indian depository to issue of IDRsWhich of these statements is/are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer?
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Consider the following statements about Indian Depository Receipts. 1. IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.2. In an IDR, foreign companies would issue shares to an Indian depository, which would in turn issue depository receipts to investors in India.3. The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorise the Indian depository to issue of IDRsWhich of these statements is/are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements about Indian Depository Receipts. 1. IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.2. In an IDR, foreign companies would issue shares to an Indian depository, which would in turn issue depository receipts to investors in India.3. The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorise the Indian depository to issue of IDRsWhich of these statements is/are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements about Indian Depository Receipts. 1. IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company.2. In an IDR, foreign companies would issue shares to an Indian depository, which would in turn issue depository receipts to investors in India.3. The actual shares underlying IDRs would be held by an Overseas Custodian, which shall authorise the Indian depository to issue of IDRsWhich of these statements is/are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer?.
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