On 30^th August 2024, the IFSCA (Listing) Regulations, 2024 (“New Listing Regulations”) providing a unified regulatory framework for listing of securities and other permitted financial products was notified.

MCA vide Notification dated January 24, 2024, introduced the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 allowing the direct listing of Equity Shares by Indian public companies on International Exchanges in IFSC.

IFSCA constituted a Standing Committee on Primary Markets (“SCOP”), chaired by Shri T. V. Mohandas Pai, in February 2024 to advise IFSCA on policy and regulatory matters for the development of a vibrant and robust primary market in GIFT IFSC.

The Committee recommended that the IFSCA’s regulatory framework for listing of companies should be aligned with other international financial centres such as Singapore, Hong Kong, the USA and UK. Following extensive deliberations in the SCOP and public consultations, it was decided to replace the existing IFSCA (Issuance and Listing of Securities) Regulations, 2021 with the New Listing Regulations.

The IFSCA in its meeting held on June 27, 2024, approved the New Listing Regulations.

Salient Features of New Listing Regulation

The New Listing Regulations have been drafted to give an impetus to the listing of equity instruments (primarily by unlisted Indian companies as well as foreign companies), bonds and other permitted financial products on the stock exchanges in the IFSC.

These regulations are expected to provide a fillip to the IFSC as an investment and capital-raising financial centre. This is expected to bring investors and companies together to contribute to the growth of the financial centre. Considering that international financial centres act as hubs for fundraising by companies around the world, the New Listing Regulations have been drafted to position the IFSC as an attractive destination for raising of capital, both through equity and bonds. While they are light touch in nature, they also ensure that investors are adequately protected.

The objective of the New Listing Regulations is to enable Indian and foreign issuers to access capital through the issue and listing of securities on the stock exchanges in the IFSC. The regulations are expected to promote Ease Of Doing Business for the issuers to access capital market through a listing of securities on the stock exchanges in the IFSC with greater flexibility and efficiency.

The regulatory objective is to ensure that capital raising by the issuers in the IFSC is in a fair, orderly, efficient and transparent manner. The regulations aim to protect the interests of investors by ensuring that there is full disclosure of material information that are required for decision making by the investors.

Currently, GIFT City is India’s only approved IFSC located in the city of Gandhinagar in the State of Gujarat:

The International Financial Services Centres Authority Act, 2019 (IFSC Authority Act) has set up a Unified Authority viz. IFSC Authority (IFSCA), which has assumed power of the Securities and Exchange Board of India (SEBI) , the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority (IRDAI), and the Pension Fund Regulatory and Development Authority (PFRDA). It acts as a single window for regulating various financial activities in the IFSC.

The salient features of the New Listing Regulations are as under:

We discuss below a few important provisions of the New Listing Regulations 2024

A. New Definitions

The following few new Definitions are inserted in the New Listing Regulations

• “Banking Unit” means a unit licensed or permitted by the Authority to undertake permissible activities under International Financial Services Centres Authority (Banking) Regulations, 2020
• “certificate of deposit” means a negotiable, unsecured money market instrument issued in dematerialised form or as a Usance Promissory Note against funds deposited at a Banking Unit for a maturity period upto one year;
• “commercial paper” means an unsecured money market instrument issued in the form of a promissory note;
• “control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;
• “controlling shareholder” shall include a person who has control over the affairs of the issuer, directly or indirectly whether as a shareholder, director or otherwise;
• “convertible preference shares” means preference shares which can be converted into a predetermined number of ordinary shares usually after a specified date or upon the occurrence of certain events;
• “group entity” means an entity of a business group that consists of a parent company or of any other type of legal person exercising control over the rest of the group, together with branches and/or subsidiaries.
• “issuer” means an entity which makes or proposes to make or has made an issue of specified securities or debt securities or depository receipts or commercial paper or certificates of deposit or any other permitted financial products and intends to list on a recognised stock exchange under these regulations;
• “Listed Entity” means an entity whose specified securities or debt securities or depository receipts or any other permitted financial products are listed on a recognised stock exchange under these regulations;
• “offer document” includes a red herring prospectus, prospectus, shelf prospectus, letter of offer, tranche prospectus, placement memorandum, as applicable;
• “promoter” shall have the same meaning as assigned to it under clause (69) of section 2 of the Companies Act, 2013:

Explanation: The references to “promoter” under these regulations shall apply only in respect of companies incorporated under the Companies Act, 2013;

• “qualified institutions placement” means issue of specified securities to qualified institutional buyers on a private placement basis and includes an offer for sale of specified securities by the promoters or controlling shareholders on a private placement basis.
• “securities”,for the purposes of these regulations, shall mean specified securities, debt securities and depository receipts listed or proposed to be listed on a recognised stock exchange;

B. Applicability :

The Regulation shall apply to:

1. Initial Public Offer (IPO) of Specified Securities;
2. Follow-On Public Offer (FPO) including Fast Track Follow-On Public Offer;
3. Listing of Specified Securities without Public Offer;
4. Listing of Specified Securities already listed in other jurisdiction viz. Secondary Listing;
5. Listing of Special Purpose Acquisition Companies (SPAC);
6. Rights Issue, Preferential Issue and Qualified Institutions Placement;
7. Listing of Depository Receipts;
8. Listing of Debt Securities;
9. Environmental, Social and Governance (ESG) Labelled Debt Securities;
10. Listing of Other Financial Products such as Funds and Investment Trusts, Commercial Papers, Certificates of Deposit;
11. Listing Obligations and Disclosure Requirements of the entities listed in GIFT City IFSC.

C. General Eligibility Criteria

An issuer shall be eligible to list its securities or any other permitted financial product on a recognised stock exchange subject to the following conditions

• The issuer is incorporated in IFSC or India in a Foreign Jurisdiction, in accordance with the relevant laws of its home jurisdiction;
• the issuer operates in conformity with its constitution; and
• the issuer is eligible to issue such securities or other financial products, that are proposed to be listed on the recognised stock exchange, in conformity with the relevant laws of its home jurisdiction.

 Provided that a public Indian company proposing to list its equity shares on a recognised stock exchange shall also meet the eligibility criteria provided under Schedule XI of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, the Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024.

Explanation: The following entities shall also be eligible to list their debt securities on a recognised stock exchange:

(a) a supranational or a multilateral or a statutory institution;

(b) a municipality or any similar body; and

(c) an entity which offers or proposes to offer sovereign debt securities.

D. IPO and FPO in IFSC:

Following Issuers can make an IPO of specified securities in IFSC viz.:

a) Issuer having an operating revenue, based on consolidated audited accounts, of at least USD 20 million in the last financial year or averaged over the last 3 financial years; OR

b) Issuer having a pre-tax profit, based on consolidated audited accounts, of at least USD 1 million in the last financial year or averaged over the last 3 financial years; OR

c) Issuer having a post-issue market capitalization of at least USD 25 million; OR

d) Issuer qualifies under any other eligibility criteria specified by the IFSCA.

Offer for Sale:

Specified Securities to be held by the existing holders for a period of at least one (1) year prior to the date of filing of the draft offer document. In case of convertible securities the holding period of convertible securities or depository receipts, as the case may be, and the holding period of resultant equity shares, together, shall be considered for the purpose of calculation of the period of one (1) year.

Filing of Offer Document:

The Issuer or the Lead manager of the Issuer with a proposed issue size of more than USD 50 million are inter-alia also required to file details of material public comments received on the draft offer document and the consequent changes that are proposed to be made in the draft offer document pursuant to the material public comments. The IFSCA may issue observations on the draft offer document

Offer Timing:

The IPO shall be made by the issuer within a period of not more than twelve (12) months from the date of issuance of observations by the IFSCA.

Pricing:

The Issuer shall determine pricing, in consultation with the lead manager(s), either through a fixed price or book-building process and shall suitably disclose the same in the Offer document. Issuer shall also comply with Foreign Exchange Management (Non-debt Instruments) Rules, 2019 in case of listing of equity shares by a public Indian company.

Offer Period:

IPO shall be kept open for at least one working day and not more than ten working days. In case of simultaneous offers in any other jurisdiction, the offer period may be for same period as applicable in the other jurisdiction.

Minimum Public Offer, Allotment and Shareholding:

In the case of an Issuer incorporated in India, including in an IFSC or In case of an Issuer incorporated outside India – the minimum offer and allotment to the public shall be at least  10% of the post-issue capital and the issuer shall also maintain the minimum public shareholding of 10% of the post-issue capital on a continuous basis.

 Retail Indian Investors 

Resident Indian can also participate in the IPO through the Liberalized Remittance Scheme

Lockup of securities:

The pre-issue shareholding of promoters and controlling shareholders of the issuer shall be locked up for a period of one hundred and eighty  (180) days from the date of allotment in the IPO.

 E. Listing of Special Purpose Acquisition Companies (SPAC) In IFSC:

A SPAC is a special purpose entity to acquire an operating company. A SPAC is eligible to raise capital through IPO of specified securities on the recognised stock exchange(s) in IFSC only where:

• The target business combination has not been identified prior to the IPO;
• SPAC has provisions for redemption and liquidation in line with these New Listing Regulations 2024; and
• The Sponsor of the SPAC has a good track record in SPAC transactions, business combinations, fund management or investment banking activities and the same shall be disclosed in the offer document,

 Explanation: For the purpose of this chapter, sponsor shall mean a person sponsoring the formation of the SPAC and shall include persons holding any specified securities of the SPAC prior to the IPO.

IPO Process

The provisions relating to the appointment of a lead manager, in-principle approval from recognised stock exchange(s) and filing of offer document provided for IPOs for the issuer  of specified securities shall mutatis mutandis apply to IPO by a SPAC.

Issue Size of SPAC:

• Not less than USD 50 million;
• Sponsors shall hold at least 15% and not more than 20% of the post issue paid up capital.
• Prior to an IPO, the Sponsor shall have aggregate subscription (all securities) in the SPAC amounting to USD 10 million or an amount equivalent to at least  2.5% of the issue size, whichever is lower; or any other threshold as may be specified by the IFSCA.

Pricing

The issue shall be through a fixed price mechanism and the issuer shall determine the price in consultation with the lead manager(s).

Few brief SPAC Specific Obligations:

• Proceeds of the IPO are kept in an interest-bearing escrow account controlled by an independent custodian until consummation of the SPAC’s business combination;
• Proceeds kept in the escrow account shall be invested only in short-term investment-grade liquid instruments, as disclosed in the offer document;
• Income and interest from proceeds to be withdrawn from escrow account only for  Payment of taxes and general working capital expenses subject to prior approval by way of special resolution of the shareholders other than sponsors.
• The SPAC shall seek shareholders’ approval on the proposed business combination and shall file a detailed prospectus with the recognised stock exchange(s) containing all relevant disclosures like information of target company(ies), valuation of entities, process involved in the business combination  and a resultant company that would be formed after completion of the business combination
• SPAC shall seek prior approval from the majority of shareholders other than sponsors, for the proposed business combination.
• In the event of change in control of the SPAC, it shall provide the redemption option to the shareholders (other than sponsors) for converting their securities into a pro rata portion of the aggregate amount held in the escrow account (net of taxes payable).
• The SPAC shall complete the business combination within the timeline disclosed in the offer document, which shall not exceed 36 months from the date of listing on the recognised stock exchange(s).
• A sponsor shall not transfer or sell any of his specified securities prior to the completion of a business combination

F. Rights Issue, Preferential Issue and Qualified Institutions Placement:

A Listed Entity may make rights issues, preferential issues or qualified institutions placement of specified securities, subject to compliance with the requirements that may be specified by the Authority.

G. Listing Of Depository Receipts:

Eligibility- An issuer incorporated outside an IFSC shall be eligible to make an issue of depository receipts only if –

(i) It is authorised to issue depository receipts as per the applicable laws of its home jurisdiction; and

(ii) The underlying securities represented by such depository receipts is in dematerialized form, fully paid, and free from all encumbrances.

Offer size

The issue of depository receipts shall be of size not less than USD 700,000 or any other amount as may be specified by the Authority.

Pricing

The issuer may determine the price of the depository receipts in consultation with the lead manager(s) through a fixed price or a book-building process

H. Listing of Debt securities :

Debt securities proposed to be issued and listed on a recognised stock exchange may be offered on a standalone basis or through a series of issuances (including medium-term note programme).

Filing of documents:

The issuer is to file the listing application along with a copy of the offer document or information memorandum to be filed with the recognised stock exchange .

Minimum subscription in case of private placement of Debt Securities:

The minimum subscription amount for an investor shall be disclosed in the offer document.

Credit Rating:

Credit Rating from a credit rating agency registered either with the IFSCA or with a regulator in a Foreign Jurisdiction is mandatory. Details of Credit Rating to be disclosed in the prospectus, shelf prospectus or information memorandum, as the case may be.

From April 01, 2025 or such other date as may be specified by IFSCA, the issuer is mandated to obtain a credit rating from at least one credit rating agency registered with IFSCA and may obtain any additional credit rating(s) from a globally recognised rating agency which is registered with a regulator in a Foreign Jurisdiction.

Public Issue of Debt Securities:

Issuer shall:

• Appoint a Trustee;
• Create a Debenture Redemption Reserve;
• Meet such other requirements as may be specified by the IFSCA or the recognised stock exchange(s) in IFSC.

I. ESG Labelled Debt Securities

Applicability-

Environmental, Social and Governance (ESG) labelled debt securities including “green”, “social”, “sustainability”, and “sustainability linked” debt securities or any other ESG labelled debt securities as may be specified by IFSCA, which is listed or proposed to be listed on a recognised stock exchange.

J. Listing Of Other Financial Products

An issuer may list a fund or an investment trust, commercial paper, certificate of deposit and such other financial products as may be specified by IFSCA.

K. Listing Obligations and Disclosure Requirements of Entities listed in GIFT City IFSC

Listed entities to comply with the listing obligations and disclosure requirements based on general principles.  It shall require to appoint a qualified Company Secretary as the Compliance Officer.  

Obligation of Entities with Specified Securities listed on Recognised Stock Exchanges as a Primary Listing:

• Material or Price Sensitive Information – to be disclosed immediately;
• Amendment to MoA and AoA or any other constitutional document- Material or Price Sensitive Information;
• Intimation of Board Meeting for dividends, buy-back, decision on fund raising, financial results, decision on voluntary delisting, material litigation and any material business event such as acquisition, demerger etc. – to be given 2 working days in advance.
• Proceedings of AGM and EGM – to be disclosed immediately;
• Change in Director, KMP, Auditor or Compliance Officer – to be disclosed immediately;
• Adverse opinion by the auditor – to be disclosed immediately;
• Investigation  – to be disclosed immediately;
• Encumbrances of specified securities of the Listed Entity created or invoked or released by the promoters and the controlling shareholders – to be disclosed within two (2) working days of such creation or invocation or release, as the case may be.
• Shareholding Pattern – within fifteen (15) working days from the end of each quarter;
• Audited standalone and consolidated financial statements for the full financial year– to be disclosed immediately after the approval of the board of directors, but in any event not later than three (3) months of the end of financial year.
• Audited standalone and consolidated financial statements for each of the first 3 quarters– to be disclosed immediately after the approval of the board of directors, but in any event not later than three (45) days from the end of each quarter.
• Annual Report – to be submitted immediately after the finalisation;
• Statement of deviation(s) or variation(s) – to be submitted immediately after review by the audit committee but not later than forty five (45) days from the end of the quarter;
• Corporate Governance – timeline as may be specified by the IFSCA;
• Sustainability Report by Listed Entities having market capitalisation of USD 50 million or more – to be disclosed no later than six (6) months after the end of the financial year;
• Corporate Action such as stock split, consolidation, dividend, bonus issues or similar events – to be intimated at least three (3) working days in advance specifying the purpose of the record date;
• Meetings of shareholders and voting – to be disclosed within two (2) working days from the date of conclusion of the General Meeting
• Whistle Blower mechanism
• Website

Obligations of Entities with Debt Securities:

• Material or Price Sensitive Information – to be disclosed immediately;
  • Any redemption or cancellation of the debt securities – to be disclosed immediately;
  • Details of any interest payment(s), except where the debt securities are having fixed rate – to be disclosed immediately;
  • any buy back or put option exercised – to be disclosed immediately;
  • any delay in payment of principal and/or interest amount – to be disclosed immediately;
  • any modification in terms and conditions of the issue – to be disclosed immediately;
• Financial statements for the full financial year– to be disclosed immediately after the approval of the board of directors, but in any event not later than three (3) months of the end of financial year.
• Annual Report – to be submitted immediately after the finalisation but in any event not later than six (6) months of the end of financial year;
• Revision in Credit Rating – to be disclosed immediately;
• Record Date – to be disclosed to the holders of debt securities in a timely manner.

The link to the aforesaid Notification is as follows:
International Financial Services Centres Authority (ifsca.gov.in)