Finance ministry reduces mandatory public offering on IFSC bourses from 25% to 10%

New Delhi: The department of economic affairs has eased the listing requirements for Indian companies seeking to list on international exchanges within Gandhinagar Gift City's International Financial Service Centres (IFSCs) by allowing them to maintain a minimum of 10% public shareholding, the finance ministry said in a statement on Thursday.

Under the new rules, public Indian companies wishing to list solely on international exchanges at IFSCs should offer and allot at least 10% of the post-issue capital to the public, the ministry said.

Earlier, Indian companies required at least 25% public shareholding for continued listing on stock exchanges in Gift City – the same threshold for listing on Indian exchanges. The two international stock exchanges at Gift City are India International Exchange and NSE International Exchange.

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The ministry added, "By reducing these thresholds, the amendments in SCRR – Securities Contracts (Regulation) Rules, 1957 – facilitate easier access to global capital for Indian startups and companies in sunrise and technology sectors. This will particularly benefit Indian companies going global and having ambitions to look at opportunities for expanding their presence in other markets," it added.

Twin objectives

Mohit Chaudhary, managing partner at Kings & Alliance LLP said, "By reducing the mandatory public offering from 25% to 10%, the government aims to accomplish two objectives: encourage more entities to list on the IFSC as it allows them to retain control of their company while attracting public capital, and incentivise foreign investments to boost foreign exchange inflows.”

"On the negative side, a reduction in the public float would leave a smaller number of shares available to the public," he added.

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The government first announced its plan to allow Indian companies to list abroad in 2020, as part of a pandemic relief package. Last November the ministry of corporate affairs allowed certain unlisted companies to list directly on foreign stock exchanges. The plan was to initially roll-out overseas listings through IFSCs at Gift City, followed by an actual overseas listing.

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