The Government, on July 16, 2021, notified International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021 laying down a procedure for listing securities of companies incorporated in IFSC, Indian and foreign companies on GIFT-IFSC stock exchanges (India International Exchange and NSE International Exchange).
Later, the Government, on July 28, 2023, announced its decision to permit the direct listing of securities of public Indian companies on GIFT-IFSC stock exchanges as an initiative to boost foreign investment flows, unlock growth opportunities, and broaden the investor base for Indian companies.
For this purpose, the Government has now notified Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2024 (“NDI Rules”) through which Schedule XI- Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges has been inserted in Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
Schedule XI permits a listed and unlisted public Indian company to list its shares on any of the permitted stock exchanges in permissible jurisdictions that are listed in the said Schedule. Presently, GIFT-IFSC stock exchanges have been listed and accordingly, companies can now list their securities in IFSC in accordance with the said schedule. The listing can be both by way of the issue of new equity shares by a public Indian company as well as an offer for sale by its existing shareholders.
As per Schedule XI, a public Indian company may issue equity shares or offer equity shares of existing shareholders, subject to the following conditions, namely:-
(i) Such issue or offer of equity shares of existing shareholders shall be permitted and such shares shall be listed on any of the specified permitted stock exchanges.
(ii) Such issue or offer of equity shares of existing shareholders shall be subject to prohibited activities, and sectoral caps prescribed in paragraphs 2 and 3 of Schedule I to NDI Rules;
Further, as per Rule 34 of NDI Rules, a permissible holder (as defined under Para 2 of Schedule XI) may purchase or sell equity shares of a public Indian company that is listed or to be listed on permitted stock exchanges under Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme as specified in Schedule XI.
Also, the MCA has notified Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 laying down rules for listed and unlisted public Indian companies for listing their securities on GIFT-IFSC stock exchanges. The said rules are notified to prescribe ‘such class of public companies’, ‘such class of securities’, and ‘such other jurisdictions’ as provided in newly inserted Section 23(3) in the Companies Act, 2013 (w.e.f. October 30, 2023) which permitted certain class of public Indian companies to list their specified securities on GIFT-IFSC stock exchanges and other stock exchanges.
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