Access to the Global Market for the Indian Public Companies

A. On 24thJanuary 2024, the Ministry of Corporate Affairs (MCA) and Ministry of Finance notified the Rules allowing the direct listing of Equity Shares by Indian public companies on International Exchanges of GIFT IFSC

The Department of Economic Affairs (DEA), under the Ministry of Finance, has amended Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (the Principle Rule) and notified a new Chapter X and Schedule XI as ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’ ( the Scheme) under the Principle Rule.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.

The Securities and Exchange Board of India (SEBI) is in the process of issuing the operational guidelines for listed public Indian companies.

The international stock exchanges at GIFT-IFSC under the regulatory supervision of IFSCA namely, India International Exchange (India-INX), a Subsidiary of BSE and NSE International Exchange have been, currently, prescribed as permitted stock exchanges under the Principle Rules and the Scheme. India -INX operates 22 hours a day, six days a week. These timings facilitate international investors and NRIs to trade from anywhere across the globe at their preferred time. 

Some of the Conditions of Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme are as follows:

  1. The permissible holder: of Equity Shares issued by an Indian Public Company is not a person resident in India.
  2. Approval of CG: If the holder of Equity Shares is a citizen of a country that shares a land border with India, or an entity incorporated in such a country, or an entity whose beneficial owner is from such a country, shall hold equity shares of such public Indian company only with the approval of the Central Government.
  3. FPI Limit: The permissible holder may purchase or sell equity shares of an Indian company listed on an international exchange subject to the limit specified for foreign portfolio investmentunder these rules.
  4. Eligibility:The Indian Public Company or the existing holder of the Indian Public Company, can issue or offer Equity Shares if they are not debarred from accessing the capital market, not a wilful defaulter, not a fugitive economic offender, and the Indian Public Company is not a under inspection or investigation under the Companies Act, 2013.
  5. Compliance: The Indian Public Company needs to comply with extant laws relating to the issuance of Equity Shares including SCRA, 1956, SEBI, 1992, Depositories Act, 1996, FEMA, 1999, PMLA, 2002 and the Companies Act, 2013 and rules and regulations made there under.
  6. Depositories:The Indian public company may also enter into necessary arrangements with the Indian Depository and Foreign Depository.
  7. Sector Cap:The Indian public company to ensure that the aggregate of equity shares that may be issued or offered in a permissible jurisdiction, along with equity shares already held in India, by persons resident outside India, shall not exceed the limit on foreign holding under the Schedule I to FEMA (NDI) Rules, 2019.
  8. Voting Rights: on such Equity Shares may be exercised directly by the permissible holder or through their custodian.
  9. Pricing by Indian listed companies:The Equity Shares Issued or Offered to be at a price not less than the price applicable to a corresponding mode of issuance of such equity shares to domestic investors under the applicable laws.
  10. Pricing by Indian Unlisted Companies: The Initial listingof equity shares by a public unlisted Indian company on the International Exchange, to be at the price of issue or transfer of equity shares shall be determined by a book-building process as permitted by the said International Exchange and shall not be less than the fair market value under applicable rules or regulations under FEMA 1999. However, subsequent issuance or transfer of shares to list additional Equity Shares post initial listing would be based on applicable pricing norms of the International Exchange and the permissible jurisdiction.

B. On 30thOctober 2023, MCA notified Section 5 of the Companies Amendment Act, 2020 (CAA, 2020), that is Section 23(3) & (4) of the Companies Act, 2013 relating to Public Offer and Private Placement). Section 5 of the CAA, 2020 states that the Central Government (CG) may allow certain classes of public companies to issue securities to list on permitted stock exchanges in certain permissible foreign jurisdictions. It further states that CG may also exempt such public companies from the provisions of the following Chapters and Sections.

  • Chapter III on Prospectus and Allotment of Securities,
  • Chapter IV on Share Capital and Debentures,
  • Sections 89 & 90 – Beneficial Interest  & Significant Beneficial Owner
  • Section 127 on Punishment for failure to distribute dividends.

C. On 28thJuly 2023, Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman had announced that the direct listing of Indian Companies at GIFT- IFSC exchanges will be the first phase for allowing Indian Companies to list their securities in the international stock exchanges.

D.  ADR/ GDR- FCCB/ Masala Bond: Until now, Indian public companies have not been permitted to list their securities directly in overseas markets and instead allowed to issue underlined Equity Shareswith the issue of American Depository Receipts (ADR) or Global Depository Receipts (GDR) or list their Debt Securities on international exchanges as Foreign Currency Convertible Bond (FCCB) or Masala Bonds.

E. The note of the Finance Ministry saysthat this new initiative allowing Indian Companies to list their Equity Shares in the international Exchange will reshape the Indian capital market landscape and offer Indian companies, especially start-ups and companies in the sunrise and technology sectors, an alternative avenue to access global capital beyond the domestic exchanges. Indian companies will have the flexibility to access both markets, the domestic market for raising capital in INR and the international market at IFSC for raising capital in foreign currency from global investors.

F. Pros and cons of Direct Listing Overseas or at the GIFT CITY

  • -ve-  Costs like listing costs, stock exchange fees, compliance costs
  • -ve-  Dual compliances if the company needs to comply with domestic laws also
  • +ve – Diversified Investor base
  • +ve – Better valuation, where the risk appetite is high
  • +ve – More visibility to Indian companies, Expansion to international market
  • +ve – It allows giving exit to PE and VC funds
  • +ve – It boosts the economy as capital will be available locally for other sectors
  • +ve – For technology-driven companies, companies in the health sector, new-age solution providers, Dron manufacturing companies & Nano Technology companies will get global reach,


The latest development opens doors for Indian companies to access global markets attuned to startup and new-gen tech models. High-risk appetite in these markets enhances value for Indian public companies, expanding investor bases and international visibility. With tax benefits, GIFT City beckons investors. Yet, the regulatory framework from SEBI is pivotal. Public unlisted companies may adopt a cautious stance, monitoring GIFT City’s regulatory landscape before venturing into equity offerings on Indian international exchanges. GIFT City holds transformative potential, promising integral growth within India’s financial ecosystem. Fostering an optimal regulatory framework becomes imperative to guarantee the enduring prosperity and success of these endeavours.

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