Overseas Listing of Indian Companies

   To improve ease of doing business, the government announced allowing Indian Public companies to directly list their shares overseas. Also, private companies will not be regarded as a listed firm if their debentures are listed on Stock Exchange.

The Union Cabinet had approved the amendment bill on 04^th March 2020 enabling the listing of Indian companies on stock exchanges in foreign jurisdiction.

Indian companies will have access to variety of jurisdiction from which capital can be raised depending upon the costs of capital.

At present, Indian companies were allowed to access the overseas equity market either through depository receipts such as American Depository receipts or Global Depository Receipts or by listing their debt securities on foreign exchange. Until now many companies used to incorporate in overseas markets such as Singapore and London with an intention to list directly on foreign markets. Many Start up like Grofers, Cars24, Udaan, Pine Labs and Droom are registered in Singapore.

Also, it will help the companies to offer an easier exit to their existing investors. This will help firms such as Ola, Paytm, and Byjus which are preparing to go public over next two - three years.

As stated by Finance Minister, “Necessary regulation allowing overseas listing by Indian Entity is expected after amendments to Company Act and Foreign Exchange Management Act regulations are passed”.

Implementation will be a key. SEBI Expert Committee has given useful guidance on developing the framework:

1. Jurisdictions where listing may be permitted
2. Amendments to existing foreign exchange regime
3. Compliance cost due to differing accounting standards
4. Listing related provision of Companies Act
5. Taxation

The availability of overseas listing is expected to increase the competitiveness of the local companies in terms of having access to deeper pools of capital with lower cost, better valuation, broader investor base, and in turn boost Indian Economy.

CA Shubham Chhajed