MUMBAI: Indian companies would now be allowed to list overseas without simultaneous listing at home, Finance Minister Nirmal Sitharaman said on Sunday, the last of the 5-day-long series of announcements on the Rs20 trillion financial package aimed at restoring the health of the covid-struck economy. The Union Cabinet had approved this proposal in March.
So far, India companies looking to list overseas, had to first go public in India and only then could they list overseas by issuing American Depositary Receipts or Global Depositary Receipts. In the framework proposed by Sebi, companies could list in 10 overseas jurisdictions that have strong anti-money laundering policies and are members of the International Organization of Securities Commissions (IOSCO) and Financial Action Task Force (FATF), to ensure that the new rules are not misused.
The new rule also indirectly throws Indian stock exchanges open to competition from foreign stock exchanges as well-run companies may choose to list abroad for higher valuations.
In another step aimed at ease of doing business in India, the government said private companies which list their non-convertible debentures on stock exchanges will not be regarded as listed.
"This will enable fund-raising by Indian companies in the overseas markets, especially the new-age companies. Listing in India will not be mandatory and this will be a big relief for companies wanting to raise capital from global markets and hopefully get better valuations too," said Girish Vanvari, founder, Transaction Square, a regulatory and tax solutions firm.
The overseas listing will be governed by the listing framework of the jurisdiction concerned and not by norms laid down by the Indian regulators.
To ensure adequate liquidity and reduce scope for manipulation, a Securities and Exchange Board of India (Sebi) panel had in December 2018 suggested that only high quality companies get listed. The panel said that a minimum 10% of paid-up capital may be listed on Indian stock exchanges(s).
The corporate affairs ministry and Sebi will further announce norms on the types of companies that can list overseas and also the types of instruments eligible for the relaxation, said an official.