INSUBCONTINENT EXCLUSIVE:
New Delhi: In a significant move, the Cabinet on Wednesday approved a proposal to allow direct listing of Indian companies
overseas.
Amendment would be made in the Companies Act, 2013, for having enabling provisions that would permit foreign listing of Indian
corporates.
Currently, quite a few Indian companies have American Depository Receipts (ADRs) that are traded in the US
Some other corporates have their Global Depository Receipts (GDRs).
Briefing reporters about the Cabinet decisions, Union minister Prakash
Javadekar a proposal allowing listing of Indian companies abroad has been approved.
Apart from providing an additional fund raising avenue
for the corporates looking to expand and boost their business activities, overseas listing of shares would also help in bringing more
capital into the country.
According to the corporate affairs ministry, amendment would be carried out in Section 23 of the Act to include
enabling provisions to allow direct listing of securities by Indian public companies in permissible foreign jurisdictions.
The ministry is
implementing the Act.
Under the Act, public companies should have at least seven shareholders and have no restriction on transferability of
their shares, among other criteria.
Corporate Affairs Secretary Injeti Srinivas said the Act would have enabling provisions for listed as
well as unlisted companies in India to list their shares abroad.
These provisions would be subject to certain conditions.
"So making this
enabling provision(s) that is the proposal which Cabinet has approved," he said.
According to him, it would be broad enabling provisions
The class of companies, types of instruments that can be listed and other things would be notified in the rules.
The rollout of the scheme
in this regard might take a few months, he added.
"Now, like just you had a scheme for GDR/ADR, what will be the tax treatment and other
Most of it (will) get covered in subordinate legislation
It does not involve any amendment per se to the best of my understanding," Srinivas said.
Srinivas along with Finance Minister Nirmala
Sitharaman were also present at the briefing.
A depository receipt is a foreign currency denominated instrument, listed on an international
exchange, issued by a foreign depository to a domestic custodian and includes GDRs.
