Government Allows Indian Companies to List Overseas with Conditions
- ByStartupStory | November 1, 2023
The Indian government has granted permission for Indian companies to list on foreign exchanges, albeit with specific conditions. The corporate affairs ministry has formally notified the relevant section under the company’s law to enable this move. Currently, Indian companies’ overseas listings are executed through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).
“In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government hereby appoints the 30th day of October 2023 as the date on which the provisions of section 5 of the said Act shall come into force,” the ministry said in a notification on October 30.
However, it’s worth noting that the detailed rules governing the direct overseas listing of Indian companies are yet to be finalized. Section 5 permits these listings on permitted stock exchanges in permissible foreign jurisdictions, with specific criteria to be outlined. The Finance and Corporate Affairs Minister, Nirmala Sitharaman, had previously announced the government’s decision to allow domestic companies to list overseas, facilitating access to global capital markets. This initiative, which was initially part of the Covid relief package in May 2020, is set to begin with listings at the International Financial Services Centre in GIFT City, Ahmedabad, and later expand to other specified overseas jurisdictions.
The Securities and Exchange Board of India (Sebi) had earlier recommended a framework for facilitating direct listings, and it is expected that the Sebi framework will serve as the foundation for future regulations in this area. Sebi’s proposal includes allowing listings on stock exchanges in ten “permissible jurisdictions” with robust anti-money laundering regulations, including prominent exchanges such as the NYSE, Nasdaq, LSE, Hong Kong, and others in Japan, South Korea, France, Germany, Switzerland, and Canada.
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