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The finance ministry on Thursday issued a notification allowing companies to list on stock exchanges in GIFT City with a minimum of 10 per cent public shareholding, down from the previous requirement of 25 per cent for continued listing on stock exchanges in India and GIFT City.
Experts believe these revised thresholds will enable Indian companies to access global capital and will be a step in cementing the country’s position in the global financial landscape.
The Department of Economic Affairs (DEA) has amended the Securities Contracts Regulation Rules (SCRR), 1956, to ease listing requirements for Indian companies seeking to list on international exchanges within International Financial Services Centres (IFSCs), aligning them with global standards.
“The amendments in SCRR facilitate easier access to global capital for Indian start-ups and companies in the sunrise and technology sectors. This will particularly benefit Indian companies going global and looking to expand their presence in other markets,” the DEA stated.
In January, the Centre had already notified regulations to enable the listing of public Indian companies in GIFT-IFSC.
The IFSCA sought comments on a consultation paper in May regarding additional regulatory requirements.
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“This is a welcome move, aimed to ease requirements related to listing of Indian companies on international exchanges within GIFT-IFSC. It is an important amendment which essentially lowers the minimum public shareholding requirement for listing from 25 per cent to 10 per cent,” Suhana Islam Murshedd, Partner, AQUILAW.
Experts said the move would encourage more entities to list in the IFSC, as the amendment allows companies to retain control while attracting public capital.
“Additionally, it incentivises foreign investors to invest, boosting foreign exchange inflows, while such investors can consolidate their positions,” said Mohit Chaudhary, managing partner at Kings & Alliance LLP. However, Chaudhary, however, cautioned that a reduction in public float could render a smaller number of shares available to the public, which can have a number of implications for a stock. “Smaller float can be more vulnerable to pump-and-dump schemes because of their susceptibility to price manipulation,” he said.
To facilitate listing, the IFSC Authority will soon issue final norms outlining eligibility conditions, reporting standards, net worth requirements, disclosure norms, sustainability reporting, and accounting standards, among others.
“While the final norms will be benchmarked against global standards, they will also have similarities with those set by SEBI on listing and disclosure norms and requirements for issuers. However, they will be very light-touch regulations,” said a regulatory official.
The IFSCA is expected to issue these final guidelines within the week.
One proposal from the IFSCA suggests exempting issue sizes of $100 million or less from the requirement of seeking an observation letter or approval from the authority.
Sources said the authority had received interest from offshore companies set up by Indians but registered overseas.
As of June, around 80 broker-dealers are registered in IFSC, with five new approvals granted in the quarter and 22 clearing members. However, the financial hub has only three registered investment bankers, which are crucial for a vibrant ecosystem and volume on the exchanges.
However, for the companies already listed on domestic exchanges, the framework to allow capital raising through GIFT City exchanges is pending for approval from the Securities and Exchange Board of India (Sebi).
The authority has also conducted several outreach programmes in various cities and overseas to promote the GIFT route.
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