Centre to soon notify rules for Indian companies to list overseas

No secondary listing; will pave way for global listing of Jio, LIC, startups

ipo The idea for overseas listing was first floated by a committee set up by the Securities and Exchange Board of India (Sebi) | Shutterstock

The Centre is all set to notify seven countries and the Gujarat International Finance-Tec (GIFT) City where India companies and startups can go public, easing several norms to facilitate. The move will pave the way for a global listing by the likes of Reliance Jio, Life Insurance Corporation (LIC) and Indian startups.

While the industry has been anticipating the rules for companies to float overseas, concerns grew after officials privately told global investors and companies in meetings they were considering mandating a secondary listing for Indian firms on domestic exchanges, as a way of ensuring investors and markets prospered. However, in a relief, the ministry of corporate affairs (MCA) and the department of economic affairs have agreed to do away with the contentious clause of dual listing, which required a company to list in India as well as overseas, reported Reuters.

This makes way for companies to directly list in one of the seven markets, including the US, the UK and Japan. The list is expected to be expanded later. Interestingly, Hong Kong is a notable exclusion from the list and comes in the midst of India’s border tensions with China, reports TOI

The report, citing sources, also said that exchanges operating in the International Financial Centre at GIFT City, which have tie-ups with overseas bourses, can facilitate the stock being traded abroad as well. 

For instance, if NSE or BSE ties up with SGX, it can help the stock of an Indian company to be traded on the exchange in the GIFT City as well as Singapore. The move will help startups that may not be profitable but are looking to raise money and list at a premium. 

The idea for overseas listing was first floated by a committee set up by the Securities and Exchange Board of India (Sebi). In its recommendations in December 2018, the panel said listing Indian companies abroad would require the simultaneous easing of provisions of taxation and Foreign Exchange Management Act (FEMA), among others.

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