January 24, 2024: The government has amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, to allow direct listing of shares of Indian companies at GIFT City’s exchanges. A notification in this regard has been issued by the finance ministry.
The move is in pursuance of the announcement on July 28, 2023, by finance minister Nirmala Sitharaman to enable direct listing of Indian Companies at GIFT- IFSC exchanges in the first phase.
The corporate affairs ministry has also issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, to provide an overarching regulatory framework to enable public Indian companies to issue and list their shares in permitted international exchanges.
As of now, the framework allows unlisted public Indian companies to list their shares on an international exchange. The Securities and Exchange Board of India (Sebi) is in the process of issuing the operational guidelines for listed public Indian companies. The international stock exchanges at GIFT-IFSC under the regulatory supervision of IFSCA namely, India International Exchange and NSE International Exchange have been, currently, prescribed as permitted stock exchanges under the Rules and the Scheme.
Earlier, through the Companies (Amendment) Act, 2020, enabling provisions were included in the Companies Act, 2013, to allow direct listing of prescribed class(es) of securities of prescribed class(es) of public companies incorporated in India on permitted stock exchanges in permissible foreign jurisdictions or other prescribed jurisdictions. The enabling provisions of the Companies (Amendment) Act, 2020 were, accordingly, brought into force with effect from 30th October, 2023.
This policy initiative, to enable listing of Indian companies in GIFT-IFSC, will reshape the Indian capital market landscape and offer Indian companies, especially start-ups and companies in the sunrise and technology sectors, an alternative avenue to access global capital beyond the domestic exchanges. 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 public Indian companies will have the flexibility to access both markets i.e. domestic market for raising capital in INR and the international market at IFSC for raising capital in foreign currency from the global investors. This initiative will particularly benefit Indian companies going global and having ambitions to look at opportunities for expanding their presence in other markets. It is also expected to provide a boost to the capital market ecosystem at GIFT IFSC by provision of new investment opportunities for investors, diversification of financial products and by enhancing liquidity.
GIFT-IFSC is the maiden international financial services centre of India that connects India with global opportunities and also enables the Indian economy to connect with the global financial system and allows seamless and easy flow of global capital into India. To cater to the dynamic development needs of GIFT IFSC, the unified statutory regulatory authority, International Financial Services Centres Authority (IFSCA) has taken significant steps in accelerating global sustainable capital flows by providing an agile and world-class regulatory and business environment in GIFT IFSC.
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An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
sunita.mishra@proptiger.com
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