Indian Companies Can Now List Directly On Overseas Stock Exchanges: Govt

The SEBI had proposed allowing listings on stock exchanges in 10 "permissible jurisdictions" with strong anti-money laundering regulations, including the NYSE, Nasdaq, the LSE and Hong Kong

Overseas listings by local listed entities are currently carried out through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).

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The Centre has allowed Indian companies to list on overseas exchanges, subject to certain conditions, the PTI reported. The corporate affairs ministry on Wednesday notified the relevant section under the companies law in this regard. According to the report, overseas listings by local listed entities are currently carried out 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. The rules for direct overseas listing of Indian companies are yet to be notified.

As per the PTI report, Section 5 allows certain classes of public companies to list their securities on permitted stock exchanges in permissible foreign jurisdictions or such other jurisdictions, as may be prescribed. On October 13, a senior government official said the ministry was looking at various aspects, including the possible eligibility criteria, to prepare the rules for the direct overseas listing of companies.

On July 28, Finance and Corporate Affairs Minister Nirmala Sitharaman said the government has decided to allow domestic companies to list overseas to help them access capital from the world markets. In May 2020, the move was announced as part of the Covid relief package.

A senior government official on July 28 said that initially, the plan is to allow companies to list at the International Financial Services Centre in GIFT City, Ahmedabad, and later, they can list in any of the eight to nine specified overseas jurisdictions.

The Securities and Exchange Board of India (SEBI) had previously recommended a framework within which such direct listing will be facilitated, and it is expected that the Sebi framework will be the basis for future regulation in this area.

The SEBI had proposed allowing listings on stock exchanges in 10 "permissible jurisdictions" with strong anti-money laundering regulations, including the NYSE, Nasdaq, the LSE and Hong Kong, along with other major exchanges in Japan, South Korea, France, Germany, Switzerland, and Canada.