Department of Economic Affairs (DEA) by a recent notification has amended the Securities Contracts Regulation Rules, 1956 (SCRR) to simplify the listing criteria for Indian firms aiming to list on international exchanges within International Financial Services Centres of Gift City (IFSC), in order to align them with global practices. These amendments lower the thresholds required for listing, thereby enhancing access to international capital for Indian startups and companies in emerging sectors, particularly technology. This change is expected to significantly benefit Indian firms looking to expand their operations globally and explore new market opportunities.
Key Amendments to SCRR
Reduction in Minimum Public Float Requirement: The Notification has lowered the minimum public float requirement for companies listing on IFSC exchanges from 25% to 10%. This change aims to attract more companies to list in IFSC by reducing the dilution of promoter control and voting rights while still facilitating access to global capital.
Continuous Listing Requirement: The continuous listing requirement for companies listed on IFSC exchanges has also been set at 10%, aligning with the new public float mandate. This change is designed to streamline the listing process and encourage more Indian companies, especially in the sunrise and technology sectors, to pursue international listings.
Regulatory Framework: The amendments are part of a broader regulatory framework that includes the Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme under the Foreign Exchange Management (Non-Debt Instruments), 2019, and the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024. This framework provides a comprehensive structure for Indian companies to issue and list their shares on permitted international stock exchanges within the IFSC.
Impact on companies: The amendments are expected to particularly benefit startups and companies in the technology sector by providing easier access to international capital markets. The government anticipates that these changes will encourage at least 10 to 15 Indian companies to consider public debuts in the IFSC, with significant interest also coming from foreign entities, especially those owned by Persons of Indian Origin in regions like Singapore and the US.
Future Developments: There are ongoing discussions among the government, the International Financial Services Centres Authority, and SEBI regarding further easing of listing norms, including provisions for listed Indian companies to also seek listings on IFSC Exchanges.
MHCO Comment: These amendments reflect the government's commitment to enhancing the regulatory environment for international listings and strengthening India's position in the global financial system. This update highlights the strategic importance of the amendments and the opportunities they present for companies looking to expand their market presence internationally.
This article was released on 6 September 2024.
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