GIFT City Goes Direct: Unpacking IFSCA’s Consultation Paper on No-IPO Listings in the IFSC
Summary: On 13 July 2026, the International Financial Services Centres Authority (IFSCA) issued a Consultation Paper proposing a framework for direct listing of specified securities, including equity shares and convertible securities, on recognised stock exchanges in the International Financial Services Centre without a public offer. The proposal operationalises Regulation 40 of the IFSCA (Listing) Regulations, 2024. Under the proposed framework, eligible first-time issuers could qualify through operating revenue of at least USD 20 million, pre-tax profit of at least USD 1 million, or post-listing market capitalisation of at least USD 50 million. The framework also proposes in-principle approval, an Information Document, audited financial disclosures, independent valuation and a special pre-open session for price discovery. It would permit a minimum 10% public shareholding and impose no investor-class restriction, while allowing optional market making. The proposal excludes companies already listed on any stock exchange and leaves certain matters, including pre-open session mechanics and investment banker due diligence standards, for further consideration. The Consultation Paper sought public comments by 3 August 2026.
Introduction
On 13 July 2026, the International Financial Services Centres Authority (‘IFSCA’) issued a Consultation Paper (‘Consultation Paper’) proposing a comprehensive regulatory framework for the direct listing of specified securities—defined as equity shares and convertible securities—on recognised stock exchanges in the International Financial Services Centre (‘IFSC’), without the issuer undertaking a public offer.
The proposal addresses a structural gap that has constrained the attractiveness of GIFT-IFSC as a capital markets venue. Well-capitalised companies—particularly venture-backed technology firms, unicorns and founder-led businesses—frequently do not require fresh capital at the time of listing. Compelling such issuers to conduct a traditional initial public offering (‘IPO’) imposes underwriting costs, dilution risk and distributional complexity that may be commercially unnecessary. The IFSCA’s proposed framework, modelled on the direct listing regimes of NYSE, Nasdaq, LSE and TSE, would allow listing to serve its transparency, governance and liquidity functions without mandating a capital-raising event.
For in-house counsel, CFOs and investment teams evaluating IFSC as a listing or secondary market venue, the proposed framework warrants careful review—both for its commercial opportunity and for the material open questions it leaves unresolved.
Background
The IFSCA (Listing) Regulations, 2024 (‘Listing Regulations’) provide the foundational regulatory framework for listing of securities on IFSC exchanges. Regulation 40 of the Listing Regulations contains an enabling provision permitting issuers to list specified securities on a recognised stock exchange without making a public offer, ‘in the manner as may be specified by the Authority.’
That enabling provision has remained operationally inert. IFSCA has not, until now, specified the manner or conditions for such listings. As a consequence, any issuer wishing to list on an IFSC exchange—whether Indian or foreign—has been required to conduct a public offer, regardless of whether it required capital or a broad retail distribution. This has had two practical effects:
– Companies that could have listed at IFSC for governance, visibility or secondary liquidity purposes—without needing new capital—have had no regulatory pathway to do so. The IFSC has therefore not been accessible to the category of late-stage, well-funded companies for whom a direct listing is the most appropriate mechanism.
– The asymmetry between the IFSC framework and the direct listing regimes available on NYSE, Nasdaq and LSE has reduced GIFT City’s competitiveness as a listing destination for global and Indian issuers considering international equity markets.
The Consultation Paper, informed by the Standing Committee on Primary Markets’ Sub-Committee recommendations and a detailed comparative analysis of global direct listing regimes, proposes to close this gap.
Analysis of Key Proposals
1. Scope and Applicability
The proposed framework, set out in a Draft Circular at Annexure B to the Consultation Paper, would apply exclusively to issuers that have not previously listed their specified securities on any stock exchange—whether in India, IFSC, or any foreign jurisdiction. This is a significant limitation: existing listed companies (including those with domestic NSE/BSE listings) are not within scope. The framework is therefore directed at companies seeking their first listing and choosing IFSC as the venue, without needing to conduct a public offer to do so.
The exclusion of already-listed companies from the direct listing framework is an important constraint. An Indian company listed on NSE wishing to seek a concurrent IFSC listing—for purposes of international investor access or liquidity—would not be able to avail of this route. Clients with dual-listing strategies should note this carefully.
2. Eligibility Criteria
The proposed eligibility framework mirrors the approach taken by global exchanges: it does not prescribe a single mandatory standard but instead offers three alternative qualifying criteria, satisfaction of any one of which would enable a direct listing:
– Operating Revenue: at least USD 20 million on a consolidated audited basis in the last financial year, or averaged over the last three financial years. This mirrors the existing threshold under the Listing Regulations for listings with a public offer, reflecting IFSCA’s calibrated approach of applying consistent financial standards irrespective of listing mode.
– Pre-tax Profit: at least USD 1 million on a consolidated audited basis in the last financial year or averaged over the last three financial years. Again, this replicates the public-offer threshold—a deliberate policy choice to maintain quality consistency across listing routes.
– Post-Listing Market Capitalisation: at least USD 50 million. This is materially higher than the USD 25 million minimum market capitalisation prescribed for listings with a public offer, reflecting IFSCA’s recognition that the absence of fresh issuance and broad-based distribution creates additional liquidity risk. The USD 50 million floor is, by international standards, comparatively conservative: NYSE’s direct listing threshold requires either USD 100 million in opening-auction market value or USD 250 million in aggregate market value of publicly held shares.
Issuers with Superior Right (‘SR’) equity shares—dual-class structures—are accommodated within the framework, subject to the SR issuance having been shareholder-authorised and the SR shares having been held for at least three months prior to filing. This is a welcome inclusion for founder-led technology companies with multi-class capital structures.
3. In-Principle Approval and Information Document
The proposed listing process has two principal stages. First, the issuer applies for in-principle approval from a recognised IFSC stock exchange, which must grant or reject the application within 15 days of receiving complete information. A rejection cannot be made without affording the issuer an opportunity to make written submissions—a procedural safeguard that is appropriate given the binary nature of the approval decision.
Second, following in-principle approval, the issuer—through one or more IFSCA-registered investment bankers—files an Information Document (‘ID’) with both IFSCA and the recognised stock exchange. The investment banker(s) must submit a due diligence certificate alongside the ID. The ID is to be hosted publicly on the websites of IFSCA, the exchange, the issuer and the investment banker(s).
The ID is the functional analogue of a prospectus in a conventional IPO—it contains the material disclosures necessary for investors to make informed investment decisions, including business description, capital structure, financial statements, shareholders’ agreements, related party transactions, litigation and regulatory matters. Crucially, however, the Draft Circular includes a mandatory disclaimer to be carried in the ID stating that IFSCA’s receipt of the ID does not constitute approval or clearance of its contents—liability remains with the issuer and the investment banker(s).
4. Disclosure Standards and Financial Information
The ID must contain audited financial information for at least the last three financial years (or since incorporation for younger companies). Financial statements must be prepared under IFRS, US GAAP or Ind AS. Issuers using other home-jurisdiction accounting standards must reconcile their financials to IFRS. Financial information in the ID must not be older than six months as at the date of the document—a currency requirement that is consistent with international practice but may require careful planning for issuers with non-standard financial year-ends.
5. Pricing
The absence of a book-building process and underwriting arrangement creates a genuine price discovery challenge that the proposed framework addresses through two mechanisms. First, the issuer must determine a base listing price based on an independent valuation report prepared by a registered valuer (registered under IFSCA’s TechFin and Ancillary Services Regulations, 2025, or with the IBBI, or an equivalent foreign registrant) using internationally accepted valuation methodologies. The valuation report must not be older than three months from the ID filing date, and the financial statements underlying the valuation must similarly not be older than three months from the valuation report.
Second, the recognised stock exchange must specify a special pre-open session on the first day of listing, akin to a call auction mechanism, to determine the equilibrium market price based on buy and sell orders. This mirrors the opening reference price mechanism used on NYSE for direct listings. The detailed mechanics of the pre-open session are to be specified by the exchanges rather than by IFSCA directly—an area where further regulatory articulation will be essential.
6. Public Shareholding Norms
Indian companies (including IFSC-incorporated entities) must comply with the minimum public shareholding norms under Rule 19A of the Securities Contracts (Regulation) Rules, 1957—which mandates maintenance of minimum 10% public shareholding for IFSC-listed companies on a continuous basis. For foreign issuers, the Draft Circular proposes an equivalent requirement: a minimum public shareholding of 10% of post-listing capital on a continuous basis. The IPO-era public allotment requirement under Rule 19(2)(b) of the SCRR—which applies only in the context of a public offer through an offer document—would not apply, correctly recognising that a direct listing involves no public offer.
7. Investor Class and Market Making
Consistent with global practice, the proposed framework imposes no restriction on investor class—there is no requirement that trading be limited to accredited or institutional investors. This is a significant policy choice that distinguishes the IFSC direct listing framework from some private placement-based mechanisms. The issuer may additionally appoint one or more market makers to improve secondary market liquidity—a discretionary but practically important mechanism given that direct listings have historically been susceptible to early-day price volatility in the absence of underwriter stabilisation.
Way Forward
What the Proposed Framework Gets Right
– The three-limb alternative eligibility test is appropriately calibrated. Allowing issuers to qualify through revenue, profitability or market capitalisation avoids the rigidity of a single-metric threshold and accommodates the varied financial profiles of the unicorn and late-stage growth company universe that this framework is designed to attract.
– The inclusion of SR equity share companies within the framework is a commercially intelligent design choice. Many high-growth technology companies operate with dual-class structures, and excluding them would have significantly reduced the framework’s practical relevance for the target issuer universe.
– Imposing a higher minimum market capitalisation threshold for direct listings (USD 50 million) than for public-offer listings (USD 25 million) appropriately accounts for the liquidity risks inherent in listings without fresh issuance or broad retail distribution.
– The IFSCA’s explicit alignment with IOSCO Principles 16-18 and the comparative analysis of NYSE, Nasdaq, LSE and TSE frameworks signals a mature regulatory approach and should provide comfort to international issuers assessing IFSC’s credibility as a listing venue.
Open Questions
– Already-listed companies excluded: the restriction of the framework to companies not previously listed on any exchange is a significant structural constraint. It means that the direct listing route cannot be used as a secondary or concurrent listing mechanism by NSE/BSE-listed Indian companies, or by companies listed on foreign exchanges, seeking IFSC access. The rationale for this exclusion is not articulated in the Consultation Paper and should be challenged in the comment process.
– Pre-open session mechanics unspecified: the pricing framework delegates the design of the pre-open price discovery session to the exchanges. Until NSE IFSC and BSE International Exchange specify these mechanics, the precise price discovery mechanism for direct listings remains unknown—a significant information gap for issuers and their advisers.
– Investment banker due diligence standard: the Draft Circular requires investment bankers to submit a due diligence certificate but does not prescribe the content or standard of diligence required. In the absence of IFSCA guidance equivalent to SEBI’s diligence framework for domestic IPOs, there is a risk of inconsistency in diligence quality and potential liability uncertainty for bankers.
– Market maker framework: market making is proposed as optional rather than mandatory. Given the absence of underwriter price stabilisation, mandatory market making—or at least a minimum initial market maker appointment period—would provide greater price stability and investor confidence in the early trading period. This is an area where international practice (particularly TSE’s liquidity documentation requirements) could usefully be incorporated.
– Materiality policy requirement: the Draft Circular requires issuers to disclose their ‘materiality policy’ in the ID. For foreign issuers without a pre-existing, formalised materiality policy (common in jurisdictions where this is not a regulatory requirement), this will require preparation of a bespoke policy document as part of the listing readiness process.
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Disclaimer: The views expressed in this Update are solely those of the author and do not reflect the views of ICICI Group, or ICICI Bank or any of its affiliates. This update is prepared for general informational purposes only and does not constitute legal advice. Recipients should seek specific legal counsel before acting on any matter arising from this update. The Draft Rules are subject to change before enactment.
