Govt looking at eligibility criteria for direct overseas listing of firms

The Corporate Affairs Ministry is looking at various aspects, including the possible eligibility criteria, to prepare the rules for direct overseas listing of Indian companies, a senior official said on Friday.

Currently, overseas listings by local listed entities are carried out through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).

The official said the ministry is in discussions with finance ministry as well as other stakeholders to finalise the rules for Indian companies to list overseas.

Various aspects such as eligibility criteria are being discussed for permitting overseas listing. It is also being looked at whether both listed and unlisted domestic companies could be allowed to list abroad but things are under discussion, the official said.

The provision is part of the companies law, which is being implemented by the corporate affairs ministry. For the direct overseas listing framework, an enabling provision would be made under the Companies Act, 2013.

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.

"The government has taken a decision to enable direct listing of listed and unlisted companies on the IFSC exchanges," Sitharaman had said.

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, a government official had said on July 28.

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.

Sebi had proposed allowing listings on stock exchanges in ten "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.