## Section 41 — Global Depository Receipts (GDR)

### What is a GDR?

A Global Depository Receipt is a foreign currency-denominated instrument issued by a foreign depository bank against shares of an Indian company deposited with a custodian — enabling the company to raise capital from international markets.

### Procedure to Issue Depository Receipts — Stepwise

#### Step 1 — Board Resolution

Pass a Board Resolution authorising the company to issue Depository Receipts (DRs).

#### Step 2 — Special Resolution at General Meeting

Pass a Special Resolution at the General Meeting approving the issue of DRs (since shareholders' approval is required for raising capital from overseas).

#### Step 3 — Appoint Overseas Depository Bank

Appoint an Overseas Depository Bank (ODB) to issue the DRs to foreign investors.

#### Step 4 — Domestic Custodian Bank

The shares against which DRs are to be issued are deposited with a Domestic Custodian Bank.

#### Step 5 — Issue of DRs by ODB

The ODB issues DRs to foreign investors against the underlying shares held by the domestic custodian.

### Key Points

Approval required: Board + Special Resolution of Members.
Compliance with Foreign Exchange Management Act (FEMA) and Depository Receipts Scheme, 2014.
Voting rights generally exercised by the ODB (subject to the deposit agreement).

Worked example

### Example 1

Example: Infosys Ltd. wants to list its shares on the New York Stock Exchange via an ADR programme. It (i) passes a Board Resolution, (ii) Special Resolution at the AGM, (iii) appoints Bank of New York as the Overseas Depository Bank, (iv) deposits shares with the domestic custodian, and (v) the ODB issues ADRs to US investors.

⚠️ Common exam mistakes

Forgetting that BOTH Board Resolution AND Special Resolution are required (not just one).
Confusing GDR (foreign currency) with ordinary equity shares — GDRs are instruments held by foreign investors against deposited shares.
Missing that the ODB is overseas while the custodian is domestic — two different banks.

Bare-Act text Section 41 · Companies Act, 2013 · click to expand

A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Section 41 - Global Depository Receipts (GDR)

Worked example

⚠️ Common exam mistakes