The Centre will soon allow domestic companies to directly list on foreign exchanges, finance minister Nirmala Sitharaman said on Friday.
As a first step, Indian companies can list on the foreign exchanges at the International Financial Services Centre (IFSC) in Ahmedabad, Gujarat.
The move will see both the listed and unlisted companies accessing global capital.
At present, derivative instruments of domestic Indian stocks are listed on foreign exchanges such as American Depository Receipts (ADRs) or Global Depository Receipts (GDRs).
“I had said in May 2020 that the direct listing of securities by Indian public companies would now be permissible in foreign jurisdictions. Now, I am pleased to announce that the government has decided to enable the direct listing of listed and unlisted companies on the IFSC exchange. This is a major step forward and it will facilitate access to global capital and result in better valuation of the Indian companies,’’ Sitharaman said at an event to launch a backstop facility for debt mutual funds.
A senior government official said the rules for direct overseas listing of Indian companies will be notified in a few weeks.
The official said initially Indian companies will be allowed to list on the IFSC and later, they will be permitted in seven or eight foreign jurisdictions.
``This is a welcome move from our government. It would pave the way for the listing of Indian businesses on global platform of IFSC. In the extant regime, overseas listing by domestically listed companies is permitted only through the route of depository receipts (DR),’’ Mahavir Lunawat, managing director, Pantomath Capital Advisors Pvt Ltd, said.
The Centre is reportedly looking at jurisdictions such as the UK, Canada, Switzerland and the US.
Earlier, the Securities and Exchange Board of India had proposed listings at 10 “permissible jurisdictions” with strong anti-money laundering regulations — the NYSE, Nasdaq the LSE and Hong Kong along with other major exchanges in Japan, South Korea, France, Germany, Switzerland and Canada.
Unified code
Sitharaman said the single securities market code which was proposed in 2021 will become a reality soon.
The code will consolidate provisions of the Securities Contract Regulation Act (SCRA), 1956, Depositories Act of 1996 and the Sebi Act of 1992 into a single act with updated and rationalised set of provisions.
``The securities market code is intended to be future-ready. It will take into account developments from a long-term perspective as well as promote ease of doing business," the FM said.
CDMF arrives
The Corporate Debt Market Development Fund (CDMF), an alternative investment fund that will act as a backstop for debt mutual fund schemes during events of market dislocation, was launched by finance minister Nirmala Sitharaman in Mumbai on Friday.
The fund was first envisioned in the Union Budget of 2022. It was considered necessary after the winding-up of six debt mutual funds by Franklin Templeton in April 2020.
The event saw mass panic as investors rushed to redeem their investments in the funds, forcing the fund house to halt redemptions as the prices of debt securities held by them plummeted.
The new fund will be managed by SBI Mutual Fund. It will ensure that funds are made available to participating mutual funds in the event of a liquidity crisis.
