Cabinet Approves Direct Listing Of Indian Companies Overseas

On Wednesday, the Union Cabinet approved a proposal to allow direct listing of Indian companies overseas. An amendment will be made to the Companies Act 2013 to enable provisions that allow foreign listing of Indian corporates.

Currently, Indian firms receive foreign investments through American Depository Receipts (ADRs) traded in the US and Global Depository Receipts (GDRs).

Union minister Prakash Javadekar informed the press of the approval of the said proposal. Javadekar said that apart from providing an additional fundraising avenue for the corporates looking to expand and boost their business activities, the overseas listing of shares would also help in bringing more capital into the country.

An amendment would be carried out in Section 23 of the Act by the Corporate Affairs Ministry to include provisions that allow direct listing of securities by Indian public companies in permissible foreign jurisdictions. Under the Act, public companies should have at least seven shareholders and have no restriction on transferability of their shares, among other criteria.

The corporate ministry informed that provisions will be made for listed as well as unlisted companies in India to list their shares abroad. The class of companies and types of instruments that can be listed will be notified in the rules along with other enabling provisions.