Govt gives nod for direct listing of securities by Indian cos via GIFT IFSC

On January 24, the government officially announced the direct listing of Indian companies’ shares on the exchanges within GIFT City.

According to the announcement made on July 28, 2023, by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman, the Department of Economic Affairs (DEA), Ministry of Finance, has introduced amendments to the Foreign Exchange Management (Non-debt

Advertisement

Concurrently, the Ministry of Corporate Affairs (MCA) has issued the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.

Together, these regulatory changes establish a comprehensive framework allowing Indian public companies to issue and list their shares on approved international exchanges. Currently, the framework permits unlisted public Indian companies to list their shares on international exchanges. SEBI is in the process of formulating operational guidelines for listed public Indian companies. The India International Exchange and NSE International Exchange, operating under the regulatory supervision of IFSCA, are presently recognized as permitted stock exchanges under the revised rules and scheme.

Previously, the Companies (Amendment) Act, 2020, incorporated provisions into the Companies Act, 2013, enabling the direct listing of specified classes of securities of certain public companies incorporated in India on approved stock exchanges in permissible foreign or prescribed jurisdictions. These provisions came into effect from October 30, 2023.

This strategic initiative to facilitate the listing of Indian companies at GIFT-IFSC is poised to reshape the Indian capital market, offering domestic companies, particularly startups and those in the sunrise and technology sectors, an alternative pathway to global capital beyond national exchanges. The move is anticipated to enhance the valuation of Indian companies in alignment with global benchmarks, attract increased foreign investments, unlock growth prospects, and diversify the investor base. Public Indian companies will have the flexibility to access both domestic and international markets, raising capital in INR and foreign currency, respectively. This initiative is especially beneficial for Indian companies with global aspirations and plans for expanding their footprint in other markets. Additionally, it is expected to invigorate the capital market ecosystem at GIFT-IFSC by introducing new investment opportunities, diversifying financial products, and bolstering liquidity.