The Government of India has now announced the direct listing of shares of Indian companies at GIFT City’s exchanges in a notification.
This also includes the India International Exchange and NSE International Exchange.
Read on to find out all the details!
Companies Can List Directly At GIFT City’s Exchanges
The notification was issued after the announcement by Finance Minister Nirmala Sitharaman about the government going through the process of direct listing of stocks at GIFT IFSC.
She was talking at the Vibrant Gujarat Global Summit, “And I am confident it will happen at the earliest. With that, Indian companies should be able to access global funds easily.”
The Corporate Affairs Ministry had announced, back in October 2023, that some specific groups of public companies would be able to list directly on foreign stock exchanges.
As per the finance ministry’s statement, “These, together, provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international exchanges. As of now, the framework allows unlisted public Indian companies to list their shares on an international exchange.”
SEBI In Process of Issuing Operational Guidelines
The ministry also noted that the Securities and Exchange Board of India (SEBI) is “in the process” of issuing operational guidelines, specific for listed public companies.
This move will enable unlisted public companies of India to list their shares on an international exchange, beginning with the GIFT City exchanges.
The government of India has further plans of listing companies directly on the London Stock Exchange, as confirmed during the end of the 12th India-UK Economic and Financial Dialogue in September 2023.
Prior to this, Indian companies were not allowed to list directly on overseas markets and had to use depository receipts (ADRs or GDRs) in order to list on foreign markets.
As per reports, the eligibility criteria for direct listing states that promoters, directors, and selling shareholders will not be debarred from accessing capital market. Additionally, none of them should be wilful defaulters or fugitive economic offenders.
4. The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, were issued by the corporate affairs ministry to provide an overarching regulatory framework for public Indian companies to issue and list shares on permitted international exchanges.
9. Eligibility criteria for direct listing include promoters, directors, and selling shareholders not being debarred from accessing the capital market, and none of them being wilful defaulters or fugitive economic offenders.
10. The government expects this policy initiative to reshape the Indian capital market landscape, offering alternative avenues for Indian companies to access global capital and boost foreign investment flows.
The government, on January 24, notified the direct listing of shares of Indian companies at GIFT City’s exchanges.
As per a notification from the finance ministry, the eligible exchanges are India International Exchange and NSE International Exchange.
The notification comes less than a fortnight after Finance Minister Nirmala Sitharaman had said at the Vibrant Gujarat Global Summit earlier this month that the government was going through the process of direct listing of stocks in GIFT IFSC in a “very systematic manner”.
“And I am confident it will happen at the earliest. With that, Indian companies should be able to access global funds easily,” Sitharaman had said on January 11.
Earlier, in late October 2023, the corporate affairs ministry had said certain classes of public companies can directly list on foreign stock exchanges after Sitharaman had announced the same in July 2023. Today, the corporate affairs ministry also issued the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.
“These, together, provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international exchanges. As of now, the framework allows unlisted public Indian companies to list their shares on an international exchange,” the finance ministry said in a statement, adding that the Securities and Exchange Board of India (SEBI) is “in the process” of issuing the operational guidelines for listed public companies.
The direct listing of Indian companies’ shares on GIFT City exchanges is the first step in allowing them to list overseas, with the government saying in September 2023 at the end of the 12th India-UK Economic and Financial Dialogue that it was exploring the possibility of direct listing on the London Stock Exchange. Until now, Indian companies have not been permitted to list directly overseas markets, and instead use depository receipts — American Depository Receipts or Global Depository Receipts — to do so.
As per the January 24 notification, which amend India’s Foreign Exchange Management (Non-debt Instruments) Rules of 2019, a public Indian company is permitted to issue shares on the aforementioned exchanges if it, any of its promoters, promoter group, directors, or selling shareholders are not debarred from accessing the capital market. Further, none of the promoters or directors of the company should be a promoter or director of another Indian company which is debarred from accessing the capital market. Some of the other eligibility criteria include promoters or directors not being wilful defaulters or fugitive economic offenders.
“This policy initiative…will reshape the Indian capital market landscape and offers Indian companies, especially start-ups and companies in the sunrise and technology sectors, an alternative avenue to access global capital beyond the domestic exchanges,” the finance ministry said.
“This is expected to lead to better valuation of Indian companies in line with global standards of scale and performance, boost foreign investment flows, unlock growth opportunities and broaden the investor base,” it added.
