R ARIVANANTHAM
CHENNAI, JAN 24
The Finance Ministry on Wednesday notified direct listing of Indian companies on GIFT City’s exchanges, a move expected to enable startups and unlisted companies access global capital.
Government of India has notified rules to enable direct listing of securities by public Indian companies on International Exchanges at GIFT IFSC. This move aims to boost foreign investment flows, unlock growth opportunities and broaden the investor base.https://t.co/tXbbgfHaFw
— IFSCA (@IFSCA_Official) January 24, 2024
Indian companies can now list on the financial hub’s India International Exchange and NSE International Exchange at Gandhinagar, the ministry said.
- Initiative to boost foreign investment flows, unlock growth opportunities and broaden the investor base for Indian companies
- Centre’s approval will be needed if a local company with shareholders from neighbouring countries wants to list on exchanges registered in a new financial hub
- The rules – which apply to listings on the India International Exchange and the NSE International Exchange at IFSC – state that companies will need to comply with foreign direct investment caps.
- Founders and directors of companies exploring such listings must also not be debarred from accessing capital market
The notification comes less than a fortnight after Finance Minister Nirmala Sitharaman had said at the Vibrant Gujarat Global Summit earlier this month that the government was going through the process of direct listing of stocks in GIFT IFSC in a “very systematic manner”.
“And I am confident it will happen at the earliest. With that, Indian companies should be able to access global funds easily,” Sitharaman had said on January 11.
“This policy initiative, to enable listing of Indian companies in GIFT-IFSC, will reshape the Indian capital market landscape and offers Indian companies, especially startups and companies in the sunrise and technology sectors, an alternative avenue to access global capital beyond the domestic exchanges,” the finance ministry said in a statement.
The markets regulator will issue operational guidelines, it added.
The government recently amended the Companies Amendment Act 2020 to allow a specified class of securities, issued by certain public companies, to be listed on stock exchanges in permitted foreign jurisdictions.
Such listings are for now limited to the International Financial Services Centre at the Gujarat International Financial Tech-City.
The ministry of corporate affairs has issued rules for governing the listing of equity shares in permissible jurisdictions, where it has specified that Nidhi companies, companies having negative net worth, and those having outstanding deposits from the public, will not be eligible for listing.
These rules together will provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international exchanges, the finance ministry said.
The latest notification also allows Indian companies the flexibility to access both the domestic and international markets for raising capital in rupees and foreign currency.
“This initiative will particularly benefit Indian companies going global and having ambitions to look at opportunities for expanding their presence in other markets,” the Finance Ministry said.
The move follows finance minister Nirmala Sitharaman’s remarks in September on permitting Indian companies to undertake direct foreign listings.
“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 the investor base,” the Finance Ministry said.
