Rediff On The Net, Infotech: FERA trips up Infosys's ADR plans


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April 20, 1998

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FERA trips up Infosys's ADR plans

Proposals that would violate the Foreign Exchange Regulations Act has tripped up plans Infosys had to raise $ 125 million for its new facilities in Bangalore.

The company had hoped to issue American Depository Receipts to raise $ 75 million and give employees stock options to raise the remaining $ 50 million.

T O D A Y

• Chennai challenger
• Infosys trips up
• Net policy review
• MACH-Iridium tie-up

The finance ministry has objected to these proposals, stating that employees could sell the Indian company's stocks on a foreign stock exchange, which is not permitted in India. The same loophole would also allow those who purchased the ADRs to make a killing on any foreign stock exchange where Infosys is listed.

Now the company has the option to plug these loopholes and come up with a fresh proposal to get the finance ministry's okay.

The company first went public in 1993 to raise Rs 130 million. Now it is valued around Rs 1,400 per share.

-Compiled from the Indian media

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