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Indian public companies can now list on international stock exchanges
Indian public companies can now list on international stock exchanges

January 25, 2024

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The Department of Economic Affairs, Ministry of Finance, has amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, to allow direct listing of equity shares of companies incorporated in India on certain international exchanges. Simultaneously, the Ministry of Corporate Affairs has issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.

Together, the above regulatory changes provide a framework to enable public Indian companies to issue and list their shares in permitted international exchanges. The following international exchanges have been permitted as of now: India International Exchange and NSE International Exchange.

This is in pursuance of the government’s announcement in July last year to enable direct listing of Indian Companies at Gujarat International Finance Tec-City (GIFT) - International Financial Services Centre (IFSC) exchanges.

Nasscom’s recommendation: This is in line with Nasscom’s recommendation in the past to operationalise Section 23 of the Companies Act. Section 23 of Companies Act, 2013, was amended in 2020 to allow direct listing of prescribed classes of securities of prescribed classes of public companies incorporated in India on permitted stock exchanges in permissible jurisdictions.

Impact on industry: This regulatory framework offers Indian companies, especially start-ups an alternative avenue to access foreign capital. 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 investor base. It is also expected to provide a boost to the capital market ecosystem at GIFT-IFSC by providing new opportunities to investors, diversified financial products ultimately leading to enhanced liquidity.

FAQs related to direct listing have been published. Key clarifications include:

·       Public companies falling under sectors prohibited for Foreign Direct Investment cannot issue or offer equity shares under this scheme.

·       It is not mandatory for an unlisted company intending to list on international exchanges to also list on domestic exchanges. However, there is no restriction on such companies to opt for listing on domestic as well as international exchanges.

·       Indian residents cannot purchase or sell shares of an Indian company listed on an international exchange.

Benefits of listing on IFSC:

·       The transactions on the stock exchanges in IFSC will be in foreign currency, eliminating the currency risk for the investors.

·       The stock exchanges in IFSC have extended trading hours (more than 20 hours in a day) catering to investors of all significant jurisdictions in the world.

·       Capital gains arising out of transfer of equity shares of Indian companies in GIFT-IFSC is exempted from tax.

Next steps: As of now, the framework allows only unlisted public Indian companies to list their shares on an international exchange. SEBI is in the process of issuing the operational guidelines for listed public Indian companies.

If you are interested in discussing this topic with us further, kindly write to garima@nasscom.in and tejasvi@nasscom.in.


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Garima Prakash
Deputy Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech

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