Introduction: On January 24, 2024, the Ministry of Finance introduced a historic initiative allowing public Indian companies to directly list securities on International Exchanges of GIFT IFSC. This move aims to stimulate foreign investment, unlock growth opportunities, and broaden the investor base for Indian companies.
Amendments and Framework: In response to the announcement by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman in July 2023, the Department of Economic Affairs amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. Simultaneously, the Ministry of Corporate Affairs issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024. Together, these amendments provide a comprehensive regulatory framework, allowing unlisted public Indian companies to list shares on international exchanges.
Operational Guidelines and Stock Exchanges: While operational guidelines for listed public Indian companies are underway by SEBI, the international stock exchanges at GIFT-IFSC, including India International Exchange and NSE International Exchange, are currently prescribed as permitted stock exchanges under the Rules and the Scheme.
Enabling Provisions and Companies Act, 2013: Enabling provisions for direct listing were incorporated in the Companies Act, 2013, through the Companies (Amendment) Act, 2020. These provisions, in effect since October 30, 2023, allowed prescribed class(es) of securities of public companies incorporated in India to be listed on permitted stock exchanges in permissible foreign jurisdictions.
Reshaping the Capital Market Landscape: This policy initiative is set to reshape the Indian capital market, offering start-ups and technology companies an alternative avenue to access global capital. The move is expected to enhance valuation, attract foreign investment, unlock growth opportunities, and broaden the investor base. Public Indian companies will now have the flexibility to raise capital in both domestic and international markets.
Benefits and Opportunities: The initiative is particularly advantageous for Indian companies with global ambitions, providing opportunities for expansion in other markets. It is anticipated to bolster the capital market ecosystem at GIFT IFSC by offering new investment opportunities, diversifying financial products, and enhancing liquidity.
Conclusion: The Ministry of Finance’s decision to allow direct listing of securities on GIFT IFSC marks a transformative moment for the Indian capital market. This policy is poised to benefit a wide spectrum of companies, from startups to technology giants, by providing them with a global platform for raising capital. As the Indian economy connects with the global financial system, this initiative is expected to bring about significant growth, increased foreign investment, and a more robust and diversified capital market landscape at GIFT IFSC.
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Ministry of Finance
Government allows direct listing of securities by public Indian companies on International Exchanges of GIFT IFSC
Initiative to boost foreign investment flows, unlock growth opportunities and broaden the investor base for Indian companies
In pursuance of the announcement on July 28, 2023 by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman to enable direct listing of Indian Companies at GIFT- IFSC exchanges in the first phase, the Department of Economic Affairs (DEA), Ministry of Finance, has amended Foreign Exchange Management (Non-debt Instruments) Rules, 2019, and notified Foreign Exchange Management (Non Debt Instruments) Amendment Rules 2024 the ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’.
Simultaneously, the Ministry of Corporate Affairs (MCA) has issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.
These, together, 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. 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 offers 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.
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ABOUT GIFT-IFSC
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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