Indian Companies Now Permitted to List Directly on Foreign Stock Exchanges: Government
In a significant move, the Indian government has given permission for Indian companies to list on foreign stock exchanges, with certain conditions in place.
The corporate affairs ministry has notified the relevant section under the companies law to enable this provision. Currently, Indian listed entities can only undertake overseas listings through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).
The ministry stated in a notification on October 30, “In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government hereby appoints the 30th day of October 2023 as the date on which the provisions of section 5 of the said Act shall come into force.”
However, the rules governing the direct overseas listing of Indian companies are yet to be finalized and notified.
Section 5 of the Companies (Amendment) Act allows certain classes of public companies to list their securities on permitted stock exchanges in foreign jurisdictions, as prescribed.
A senior government official revealed on October 13 that the ministry was considering various aspects, including eligibility criteria, to draft the rules for direct overseas listings.
Initially, companies will be allowed to list on the International Financial Services Centre in GIFT City, Ahmedabad, and later on, they can list on any of the eight to nine specified overseas jurisdictions.
The Securities and Exchange Board of India (SEBI) has previously recommended a framework for facilitating direct listings, and it is expected that this framework will serve as the basis for future regulations.
SEBI proposed allowing listings on stock exchanges in ten “permissible jurisdictions” with strong anti-money laundering regulations, including the NYSE, Nasdaq, LSE, and Hong Kong, along with major exchanges in Japan, South Korea, France, Germany, Switzerland, and Canada.
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