Govt mulls bringing amendments in Budget session for direct listing of securities abroad

By: |
August 25, 2021 6:33 PM

Parliament in September 2020 passed the Companies (Amendment) Bill, 2020 that permitted direct overseas listing of Indian corporates, among other things.

Currently, quite a few Indian companies have American Depository Receipts (ADRs) that are traded in the US. Some corporates also have Global Depository Receipts (GDRs). Currently, quite a few Indian companies have American Depository Receipts (ADRs) that are traded in the US. Some corporates also have Global Depository Receipts (GDRs).

The government may introduce legislative amendments in the Budget session of Parliament to enable Indian companies to directly list certain prescribed classes of securities abroad, Revenue Secretary Tarun Bajaj said on Wednesday.

Direct listing of securities overseas by Indian entities is allowed but there are certain issues which need to be sorted out for this to become a success, he said, without elaborating on the hurdles.

“The direct listing is under consideration of the government because to make it success there would be requirements of some amendments to legislations to ensure there is smooth trading of these securities outside the territory of India.

“We are in discussions with the players who are asking for this. Maybe in the Budget session we will see what we can do,” Bajaj said.

The two-part Budget session of Parliament usually commences in the last week of January every year.

Bajaj also said there is no mandatory requirement of listing of such securities at the International Financial Services Centre (IFSC) at this point of time.

However, he said, it will be looked at when the regulations are framed.

Parliament in September 2020 passed the Companies (Amendment) Bill, 2020 that permitted direct overseas listing of Indian corporates, among other things.

Amendments were carried out in Section 23 of the Companies Act 2013 to include enabling provisions to allow direct listing of securities by Indian public companies in permissible foreign jurisdictions.

Listing of Indian companies in foreign stock exchanges is expected to increase the competitiveness of Indian companies in terms of access to capital, broader investor base and better valuations.

Currently, quite a few Indian companies have American Depository Receipts (ADRs) that are traded in the US. Some corporates also have Global Depository Receipts (GDRs).

A depository receipt is a foreign currency denominated instrument, listed on an international exchange, issued by a foreign depository to a domestic custodian.

In 2018, market regulator Securities and Exchange Board of India (SEBI) had proposed to allow direct listing of Indian companies on overseas bourses and of foreign firms on Indian exchanges.

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