The Indian government has enacted a policy enabling domestic firms to register on foreign stock exchanges, provided they adhere to stipulated requirements. The Ministry of Corporate Affairs has officially notified this under the relevant section of the company legislation.
Traditionally, companies in India have pursued foreign listings via American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). However, the specific regulations for direct overseas listings are still pending.
As per Section 5, certain categories of public companies have the authorization to list their securities on approved foreign exchanges within designated international regions or other areas as may be determined.
On October 13, a prominent official from the ministry indicated that deliberations were ongoing to define potential criteria for the direct overseas listing rules.
The Finance and Corporate Affairs Minister, Nirmala Sitharaman, on July 28, stated that the government had approved the overseas listing of Indian companies, an initiative aimed at providing them with access to a wider global capital pool. This decision was originally declared in May 2020 as a component of the Covid-19 economic support measures.
According to a senior government representative, the initial phase would permit firms to list in the International Financial Services Centre situated in GIFT City, Ahmedabad. Subsequently, listings would be allowed in approximately eight or nine designated foreign jurisdictions.
The Securities and Exchange Board of India (Sebi) had previously outlined a framework to govern such direct listings, and it is anticipated that Sebi’s guidelines will form the groundwork for subsequent regulations.
Sebi’s proposal included enabling listings on exchanges in ten “permissible jurisdictions” recognized for their stringent anti-money laundering statutes. These jurisdictions encompass prominent stock exchanges like the NYSE, Nasdaq, LSE, Hong Kong, as well as major markets in Japan, South Korea, France, Germany, Switzerland, and Canada.
