As per the latest developments, the overseas listing of large Indian companies such as Reliance Jio, Life Insurance Corporation and other startups, which may otherwise not get enough desired valuation in India, has been made easier. Government has eased several norms to facilitate the whole process.
The ministry of corporate affairs (MCA) and the department of economic affairs have agreed to do away with the contentious clause of dual listing, which required a company to list in India as well as overseas.
Indian companies can now directly list in seven countries-US, UK, Japan, Germany, France, Canada, South Korea. The list may be expanded later but Hong Kong is a notable exclusion amid India’s border tensions with China.
Further, exchanges operating in the International Financial Centre at GIFT City, which have tie-ups with overseas bourses, can facilitate the stock being traded abroad as well, the publication mentioned citing sources. For instance, if NSE or BSE ties up with SGX, it can help the stock of an Indian company to be traded on the exchange in the GIFT City as well as Singapore. “It will really help startups which may not be profitable but are looking to raise money and list at a premium,” a newspaper quoted a market player as saying.
Earlier policy makers were wary of allowing companies to list directly in foreign bourses, but the recent change in regulation in seen as a major shift in government’s stance. As a first step, the Modi administration has amended the Companies Act, which will be followed by umbrella guidelines by the finance ministry and rules for unlisted companies by the MCA and those for listed entities by Sebi. The revenue department is separately going to address the tax issues as the government is seeking to ensure the first listing by an Indian entity in the early part of next year, the ToI report mentioned.
In order to facilitate the global listing, the government will prescribe norms in a way that the company has to be either profitable or report operating profits during the preceding three years or should have paid-up capital, funds in the security premium account and tangible and intangible assets above a specified value.
Besides, the proposal piloted by the MCA is also expected to ensure that there is no insistence on a premium listing on foreign exchanges and a standard listing will do.
Sources told the publication that the ministry has already held discussions with investment bankers, Indian companies as well as bodies such as the US-India Business Council. Buoyed by the amendment, foreign exchanges are courting Indian companies as well as the government to list some of the companies abroad in what will be seen as a powerful message that India is open to doing business with the world. Worth mentioning here is that several Chinese companies in the recent past have listed overseas.