In a groundbreaking move, the Ministry of Corporate Affairs (MCA) has introduced the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, while the Ministry of Finance has amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. This development brings forth the ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme,’ as officially notified on January 24, 2024.
Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024:
It provides a structured framework for unlisted and listed public companies to issue equity shares for listing on permitted stock exchanges in permissible jurisdictions. It is applicable to unlisted and listed public companies following regulations issued by the Securities and Exchange Board or the Authority. It also offers an avenue for unlisted public companies, meeting specified criteria, to issue equity shares for listing on stock exchanges in permissible jurisdictions.
Amendment to Foreign Exchange Management (Non-debt Instruments) Rules, 2024:
The amendment empowers Indian public companies to directly list their equity shares on international exchanges of GIFT IFSC (Gujarat International Finance Tec-City International Financial Services Centre). Permissible holders can purchase or sell equity shares of Indian public companies listed or to be listed on international exchanges, subject to specified conditions. It provides an inclusive regulatory framework for GIFT-IFSC exchanges, aligning them with other recognized stock exchanges.
The initiative empowers Indian companies, especially start-ups and those in technology sectors, with an alternative avenue to access global capital beyond domestic exchanges and enhances valuation of Indian companies, aligning with global standards, leading to increased foreign investment flows and growth opportunities. The welcomed change brings flexibility for public Indian companies to access both domestic and international markets, raising capital in INR and foreign currency. It sparks a transformation in the capital market environment at GIFT IFSC, unlocking fresh investment prospects, broadening the range of financial products, and elevating overall liquidity.
Member of the working group and MD of Pantomath Capital Advisors expressed that the direct listing at IFSC would enable corporates to tap cross-listings for substantial finance, seizing expansion opportunities domestically and internationally. He emphasized that this decision aims to transform IFSC into a thriving global financial hub, providing access to global capital for Indian enterprises.
This strategic move is poised to reshape India’s capital market landscape, offering unprecedented opportunities for companies to grow, diversify, and access global investment avenues.