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Govt allows direct listing at IFSC to enable local cos raise global capital

The move will enable startups and other domestic companies to access the global market and raise capital in foreign currency through GIFT IFSC

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Khushboo Tiwari Mumbai

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The government on Wednesday permitted the direct listing of Indian companies on the Gujarat International Finance Tec’s (GIFT’s) international exchanges to boost foreign investments. The Ministry of Finance issued a notification, amending the Foreign Exchange Management Act (FEMA) to permit the listing on the international exchanges in the International Financial Services Centre (IFSC). The corresponding provision to enable listing has also been made to the Companies Act.
 
In July last year, Finance Minister Nirmala Sitharaman made an announcement on the direct listing of Indian Companies at GIFT- IFSC exchanges in the first phase. The move will enable startups and other domestic companies to access the global market and raise capital in foreign currency through GIFT IFSC. Market experts believe that listing at the IFSC exchanges may also help seek better valuation at global standards and increase the investor base with foreign inflow. Both listed and unlisted public domestic companies will be able to issue and list their shares at the IFSC exchanges.
 
Currently, the framework allows unlisted public Indian companies to list their shares on the international exchange while the Securities and Exchange Board of India (Sebi) is in the process of issuing the operational guidelines for listed public Indian companies. 
 
The India International Exchange and NSE International Exchange are at present the only two permitted international exchanges in GIFT-IFSC. 

Only non-residents and offshore investors will be able to invest in the listed companies, thus domestic mutual funds and investors cannot participate.

The IFSC Authority also issued details on the companies that can file a prospectus for listing at the GIFT City. Companies from sectors where FDI is prohibited will not be allowed to list. Also, the equity shares listed on international exchanges will be counted towards the foreign holding of the company.

“The rules allow Indian public companies to offer their equity shares as a fresh subscription and also allow shareholders of such companies to offer their equity shares (OFS) as modes of listing. The traction that GIFT City garners for companies will help the government as a test case to move to other jurisdictions in the future, if they deem fit,” said Manendra Singh, Partner, Economic Laws Practice.

The companies listed at the GIFT City will have to follow disclosure and regulatory requirements specified under the IFSCA (Issuance and Listing of Securities) Regulations, 2021 (ILS Regulations).

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First Published: Jan 24 2024 | 9:00 PM IST

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