Listing in foreign markets becomes easier
The provisions for direct overseas listing were approved by the government, as part of the Covid relief package announced in May 2020, but the rules in this regard are yet to be notified.
Finance Minister Nirmala Sitharaman on Friday said Indian companies can now list directly on foreign exchanges and the International Financial Services Centre (IFSC) in Ahmedabad.
The in-principle nod for direct foreign listing were given approval by the government, in May 2020 as part of Covid relief package, but the rules in this regard are yet to be notified.
With this, Indian companies can now access foreign funds on various exchanges abroad.
“A direct listing of securities by domestic companies will now be permissible in foreign jurisdictions. I’m also pleased to announce that the government has taken a decision to enable the direct listing of listed and unlisted companies on the IFSC exchanges. “So, this is a major step forward. This will facilitate access to global capital and better valuation,” Sitharmanan said.
The rules for direct foreign listing will be notified soon.
Initially the Indian companies will be allowed listing on IFSC, and later, will be permitted in specified foreign jurisdictions.
Sitharaman made the announcement about the foreign listing during an event to launch a corporate debt market development fund, which is a bailout facility for debt funds.
This facility will be a backstop facility for certain debt funds when there is pressure on the debt markets. This facility was announced by Sebi last month.
The move is liely to bolster the confidence of mutual funds and investors in the corporate debt markets while also improving secondary market liquidity in corporate debt securities.
SBI Funds Management will serve as the investment manager of the CDMDF.
At present, domestic companies can raise money from abroad through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Companies like Infosys and Wipro have opted for this facility.
The move to allow foreign listing would be a big boost to the startups.
Earlier, reports said the government was considering allowing foreign listings in seven countries initially, including Britain, Canada, Switzerland and the US. Sebi had proposed 10 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.