Indian corporations have received approval to be listed on international stock markets as a result of a recent declaration from the Ministry of Corporate Affairs (MCA) regarding Section 5 of the Companies Amendment Act, 2020. This announcement, disclosed on a Tuesday evening, marks a substantial transformation in India’s corporate sector. Initially, the introduction of this program will concentrate on enabling Indian enterprises to become listed on foreign stock exchanges through the International Financial Services Centre (IFCS) situated in GIFT City. Moreover, there are plans to streamline a more inclusive direct listing procedure in the coming times.
Indian Companies Granted Direct Listing on Foreign Stock Exchanges: A Regulatory Milestone
The amendment to the Companies Act 2013, initially set in motion in 2020, now officially permits certain Indian companies to list directly on foreign stock exchanges. This transformative change came into force on October 30, 2023. Nitesh Mehta, a Partner at BDO India specializing in Mergers and Acquisitions (M&A) Tax, shared insights into this development. He highlighted that this regulatory shift brings India one step closer to enabling its companies to be publicly traded abroad. This change holds great promise for contemporary businesses and startups that aspire to have an international presence, where valuations and investor sentiments may differ from those in the domestic market.
Anticipating Further Clarity: Tax Implications for Foreign Shareholders in India’s Expanding Global Equity Landscape
Nevertheless, a comprehensive understanding of the upcoming details is eagerly awaited, particularly with regard to the regulatory framework. Additionally, it is imperative to take into account the tax implications in India for foreign shareholders who engage in the trading of such shares on international exchanges. Presently, Indian companies can only access global equity markets through depository receipts or by offering their debt securities for listing on foreign stock markets.