Rule 13 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 13 lets a company incorporated outside India issue Indian Depository Receipts (IDRs) to investors in India. Sub-rules (1) to (7) set the conditions: who is eligible, the approvals and filings, the parties involved, how the prospectus is delivered, what an application form needs, how IDRs are transferred, redeemed or nominated, and limits on repatriation and size. The contents of the prospectus are in sub-rule (8), explained in our next article. This article states the rule as amended up to G.S.R. 491(E) dated 12 August 2024 (in force 9 September 2024) per the MCA e-book; later amendments should be checked. The rule refers to SEBI regulations, the Foreign Exchange Management Act, 1999 and other instruments as printed; the reader should check the current law, and this article names no replacement. For foreign company matters, see our foreign company filing service.
No company incorporated outside India may issue IDRs unless it meets rule 13, the SEBI (ICDR) Regulations, 2009 as printed and RBI directions. The issuer needs pre-issue paid-up capital and distributable reserves of at least US$ 50 million, a minimum average market capitalisation of US$ 100 million over three years, three years of continuous trading and a profit track record of three out of five years. It needs prior written SEBI approval, applied for at least ninety days before the issue opens. IDRs are denominated in Indian Rupees, and the underlying shares offered in a year may not exceed twenty five per cent of post-issue equity.
Rule 13(1): the general bar
For section 390, no company incorporated or to be incorporated outside India (whether or not it has or may establish a place of business in India), called the "issuing company", shall make an issue of IDRs unless it complies with the conditions in this rule, in addition to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and any directions of the Reserve Bank of India. The Explanation defines an IDR as an instrument in the form of a depository receipt created by a Domestic Depository in India and authorised by a company incorporated outside India making an issue of such receipts. The 2009 Regulations are quoted as printed.
Rule 13(2): eligibility
The issuing company shall not issue IDRs unless:
| Clause | Condition |
|---|---|
| (a) | Its pre-issue paid-up capital and reserves that are distributable (the Act's defined term; the rule uses that defined term) are at least US$ 50 million, and it has a minimum average market capitalisation during the last three years in its parent country of at least US$ 100 million. |
| (b) | It has been continuously trading on a stock exchange in its parent or home country for at least the three immediately preceding years. |
| (c) | It has a track record of distributable profits in terms of section 123 of the Act for at least three out of the immediately preceding five years. |
| (d) | It fulfils other eligibility criteria laid down by SEBI from time to time. |
Rule 13(3): the procedure
| Clause | Step |
|---|---|
| (a) | Obtain, where required, approvals or exemptions from the appropriate authorities in the country of incorporation. |
| (b) | Obtain prior written approval of SEBI on an application for the issue, with the issue size. |
| (c) | Apply to SEBI (with the draft prospectus) at least ninety days before the opening date of the IDR issue, in the form, with the fee and information SEBI specifies. A proviso requires a due diligence report filed through a Merchant Banker with the application. |
| (d) | SEBI may, within thirty days of receipt, call for further information; it disposes of the application within thirty days of receiving it. A proviso says that if SEBI specifies changes to the draft prospectus within sixty days of submission, the prospectus is not filed with SEBI or the Registrar of Companies until the changes are included. |
| (e) | On approval, the issuer pays SEBI the issue fee SEBI prescribes. |
| (f) | File a prospectus certified by two authorised signatories (one a whole-time director and the other the Chief Financial Officer), stating the particulars of the Board resolution approving it, with SEBI and the Registrar of Companies, New Delhi, before the issue. A proviso: a copy of SEBI's approval and the statement of fees paid to SEBI are attached when filing with the Registrar. |
| (g) | The prospectus contains the particulars in sub-rule (8) and is signed by all the whole-time directors and the Chief Financial Officer. |
| (h) | Appoint an overseas custodian bank, a Domestic Depository and a Merchant Banker. |
| (i) | May appoint SEBI-registered underwriters. |
| (j) | Deliver the underlying equity shares to an Overseas Custodian Bank, which authorises the Domestic Depository to issue IDRs. |
| (k) | Obtain in-principle listing permission from one or more stock exchanges with nationwide trading terminals in India. |
Definitions: a Domestic Depository is a SEBI-registered custodian of securities authorised by the issuer to issue IDRs; a Merchant Banker is as defined in the SEBI (Merchant Bankers) Regulations, 1992 (as printed); an Overseas Custodian Bank is a banking company established outside India that is custodian of the equity shares behind the IDRs, under an arrangement with the Domestic Depository or through a place of business in India.
Rule 13(4): what the merchant banker delivers
The Merchant Banker delivers for registration, to SEBI and the Registrar at New Delhi: (a) the instrument constituting the issuer; (b) an attested copy of the enactments under which it was incorporated; (c) its principal office address in India, if it has a place of business here, or (d) otherwise an address in India where those documents are open to public inspection, with a certified translation if not in English; (e) a certified copy of its home-country certificate of incorporation; (f) copies of the agreements among the issuer, the overseas custodian bank and the Domestic Depository, specifying the rights passed to IDR holders; and (g) an English translation of any document not in English, certified by a key managerial personnel and attested by an authorised officer of the Embassy or Consulate of that country in India.
Rule 13(5): application forms and liability
(a) No application form is issued unless accompanied by a memorandum of the salient features of the prospectus, though it may be issued without one in connection with an invitation to an underwriting agreement; (b) a prospectus with an expert's statement is not circulated unless it states the expert's written consent and that it was not withdrawn before the copy went to SEBI and the Registrar, New Delhi; (c) the Act's provisions apply to liability for mis-statements and to punishment for fraudulently inducing investment in IDRs; and (d) persons responsible for the prospectus incur no liability for non-compliance if they prove they had no knowledge of an undisclosed matter, or the matters were in the opinion of the Central Government or SEBI not material.
Rule 13(6): transfer, redemption and nomination
A holder may transfer IDRs or ask the Domestic Depository to redeem them, and any person may seek re-issuance by conversion of underlying shares, subject to FEMA, 1999, the SEBI Act, 1992, their rules and other law. On redemption, the Domestic Depository asks the Overseas Custodian Bank to release the underlying shares for sale on the holder's behalf or transfer to the holder in the issuer's books, with a copy to the issuer. A holder may nominate a person to whom IDRs vest on death, and Form FC-5 may be used.
Rule 13(7): proceeds, size and listing
(a) Repatriation of proceeds is subject to laws on export of foreign exchange. (b) Underlying equity shares offered in a financial year through IDRs shall not exceed twenty five per cent of the post-issue equity shares. (c) IDRs are denominated in Indian Rupees. (d) IDRs are listed on recognised stock exchange(s) in India as in rule 13(3)(k) and may be purchased, possessed and transferred by a person resident in India under FEMA; a proviso allows others to do so if the issuer obtains specific RBI approval or complies with RBI policy or guidelines. (e) The issuer meets SEBI's continuous disclosure requirements. (f) On dividend or other corporate action, the Domestic Depository distributes to holders in proportion to their holdings.
Example
Atlas Global Corp., listed abroad for more than three years, meets the capital, market capitalisation and profit conditions. It applies to SEBI with a draft prospectus more than ninety days before opening, with a merchant banker's due diligence report, appoints a custodian bank and a Domestic Depository, delivers the underlying shares, files the certified prospectus with SEBI and the Registrar, New Delhi, and obtains in-principle listing permission. The shares behind the IDRs offered in the year stay within twenty five per cent of its post-issue equity.
Need help with a cross-border issue?
IDR issues combine company law, securities regulation and exchange control. For help with the foreign company side, see our foreign company filing service.
Key takeaways
- IDRs are issued by companies incorporated outside India, subject to SEBI regulations and RBI directions as well as rule 13.
- Eligibility turns on US$ 50 million capital and distributable reserves, US$ 100 million average market capitalisation, three years of trading and profits in three of five years.
- SEBI's prior written approval is needed, with application at least ninety days before the issue opens.
- Underlying shares offered in a year are capped at twenty five per cent of post-issue equity; IDRs are in Indian Rupees.
- Redemption, transfer and nomination (Form FC-5) are covered by sub-rule (6).
Read next
- Rule 13(8): what an IDR prospectus must contain
- Rules 9 to 12: certification, translation and misuse
- Sections 390 and 391: Indian Depository Receipts
- Schedules IX and X to the FEM (Non-debt Instruments) Rules, 2019: depository receipts
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.