Direct Listing of Indian Companies at GIFT City Exchanges
Notification to boost flow of foreign funds into the country
OVERVIEW:
The Central Government has issued a notification allowing the direct listing of shares of Indian Companies on international exchanges, based in GIFT City. The move is intended to increase foreign investment inflows and offering Indian companies’ greater growth avenues.
According to the press release by the Ministry of Finance, securities of public Indian companies directly list at the International Exchanges at the Gujarat International Finance Tech-City (GIFT IFSC) shall transform the Indian Market Economy.
BENEFITS OF DIRECT LISTING AT GIFT CITY:
- Global Capital Access: Companies can now tap into a vast pool of international investors who are beyond the limits of domestic exchanges
- Fairer Valuations: Global exposure allows for valuations based on international standards leading to higher price discovery for Indian companies
- Increased Foreign Investment: Rise in foreign capital inflows, boosting overall investment in Indian businesses
- Unlocking Growth: Expanded global capital opens up new opportunities for funding projects and unlocking tremendous growth opportunities
- Diversified Investor Base: Broadening of investor pool and decline in dependence on small number of markets/groups
- Dual Market Flexibility: Freedom to choose to raise capital in INR domestically or in foreign currency from global investors via IFSC, thereby providing flexibility in doing business
ARE YOU ELIGIBLE?
- Must be a public Indian Company (listed or unlisted).
- Must not be debarred from accessing the capital market by the appropriate regulator.
- Promoters, directors, and major shareholders must not be wilful defaulters or fugitive economic offenders.
- Company must be in compliance with relevant laws on equity shares, including SCRA, 1956, Companies Act, 2013, among others.
PERMISSIBLE EXCHANGES:
- India International Exchange (India INX)
- NSE International Exchange (NSE IFSC)
PERMISSIBLE HOLDERS:
- NRIs are permitted to buy and sell shares of Indian Companies listed on international exchanges under the ‘Direct Listing Scheme’
- Indian Residents are not allowed to directly purchase or sell shares of Indian companies listed on international exchanges through this Scheme.
FOCUS AREAS:
- Companies can issue new equity shares or offer existing shares for listing on permissible exchanges
- Share pricing is subject to relevant regulations
- Voting rights on listed shares exercised by foreign investors
- Compliance with legal obligations and sectoral caps on foreign investments is a must
POINTS TO REMEMBER:
- Scheme is subject to approval by the Reserve Bank of India for matters related to international exchanges.
- Additional regulations for listed companies may be issued by SEBI.
- This direct listing will be in line with the regulations under the International Financial Services Centres Authority Act, 2019 such as IFSCA (Issuance and Listing of Securities) Regulations, 2021, also known as the ILS Regulations.
- Currently, under the Direct Listing Scheme, only unlisted public companies are allowed to get listed, thereby giving them the first mover advantage to global capital markets listed on international exchanges
