Indian government has permitted certain Indian companies to directly list on foreign stock exchanges to access global capital.This provision, effective since 30th October 2023, was introduced through the Companies (Amendment) Act, 2020.It allows certain classes of domestic public companies to list their securities on foreign stock exchanges, including the GIFT International Financial Services Centre (IFSC) in Ahmedabad, Gujrat, with exemptions from certain procedural requirements (such as prospectus, share capital, beneficial ownership requirements, and failure to distribute dividends).
An IFSC is a financial centre that caters to customers outside the jurisdiction of the domestic economy.The IFSC in India is regulated by the International Financial Services Centres Authority (IFSCA), a statutory authority that was established under the International Financial Services Centres Authority Act, 2019.It is headquartered at GIFT City, Gandhinagar in Gujarat.At present, the GIFT IFSC is the maiden IFSC in India.In IFSC, all transactions must be in foreign currency (except INR). However, administrative and statutory expenses can be conducted in INR.
Direct Listing
- Direct listing is a process by which a company can list its shares on a foreign stock exchange without issuing new shares or raising capital from investors.
- Direct listing is different from the traditional initial public offering (IPO), where a company sells a portion of its shares to the public and raises funds from investors.
- Direct listing is also different from the depository receipt (DR) route, where a company issues its shares to a custodian bank, which then issues DRs to foreign investors.
- DRs are negotiable certificates that represent the underlying shares of the company and trade on a foreign exchange.
- Direct listing allows a company to access a larger and more diverse pool of investors, enhance its visibility and brand value, and improve its corporate governance and compliance standards.