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The current matter on ‘dual listings’ has garnered mixed feedback from the industry (Photo: Reuters)
The current matter on ‘dual listings’ has garnered mixed feedback from the industry (Photo: Reuters)

Overseas listing draft norms may have an option of ‘dual listing’

  • The ‘dual listing’ means that an Indian company would need to list both in India and permissible overseas jurisdiction
  • The draft paper is proposing changes to the Foreign Exchange Management Act (FEMA), the Income Tax Act, and the Companies Act among others

The government, which is on the final stages of drafting new regulations for overseas listings, might include a ‘dual listing’ clause. This could force India’s firms to also list their shares within the country, who are considering foreign listings, according to two people with direct knowledge of the matter.

While the finance ministry is still finalising the draft with the Securities and Exchange Board of India (Sebi); industry executives are lobbying and requesting government officials to do away with ‘dual listings’, altogether, said one of the individuals quoted above.

The ‘dual listing’ means that an Indian company would need to list both in India and permissible overseas jurisdiction.

"There are three options - simultaneous listing, listing in India within three years of the overseas public offer, lastly listing within five years in India from their overseas IPO. These options are based on stakeholder consultations so far," said the first person.

“The Sebi discussion paper of 2018 and Finance Ministry's policy intent announced in May this year spoke about direct listing. So the proposal of a dual listing is a backtrack of the policy intent and cabinet approved proposal. Sebi and finance ministry both from the beginning have been in favour of direct listing. But may include this proposal in draft to gauge market interest and acceptability. It could be retained or dropped later basis comments from industry," said the second of the two people quoted above on condition of anonymity.

The current matter on ‘dual listings’ has garnered mixed feedback from the industry.

While certain firms believe that the requirements to list in two countries will lead to division in liquidity for companies, trying to raise funds from public markets, it will also add a layer of friction to new companies, daring to hit the public markets.

While on the other hand, a section of the industry believes that a pure overseas listing will lead to export of capital from India

"Only overseas investors and jurisdictions will get benefit of listing of India's marquee companies. The proposal on dual listing is based on feedback from certain companies and merchant bankers who fear loss of revenue if companies are not asked to list in India too," said the second person.

Recently, Mint reported that the ministry of corporate affairs (MCA) is close to releasing a draft report that will pave the way for Indian companies to list their shares in overseas markets without listing in India first.

The draft paper is proposing changes to the Foreign Exchange Management Act (FEMA), the Income Tax Act, and the Companies Act among others.

This comes at a time when several technology companies in India are also looking to go public in the next 2-3 years such as InMobi, Paytm, Ola, Grofers, PolicyBazaar. PhonePe, Lenskart.

Recently, founder and CEO of food tech unicorn, Zomato, Deepinder Goyal, in his email to employees said that the company will be looking to go public by mid-2021.

“Local investors seem to have failed to understand loss-making technology companies, forcing startups to look at exchanges overseas to go public," said Santosh N., managing partner, D and P Advisory Services LLP, a management consultant, in an earlier interaction.

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