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March 2024

Direct Listing of Indian Companies On International Exchanges

By Dr Anup P. Shah, Chartered Accountant
Reading Time 9 mins

INTRODUCTION

New-age Indian companies often had a grouse that they were unable to get a good valuation for certain sunrise sectors in the Indian capital markets. These companies were unable to list on foreign stock exchanges and the only option available for them was to use the ADR / GDR route where Depository Receipts were issued against the Indian shares and these Receipts were listed on stock exchanges in the USA, Singapore, Luxembourg, etc. However, this has not proved to be a very successful model.

Recognising this demand from several of India’s start-up companies, the Indian Government has now permitted Indian companies to directly list their equity shares on certain international stock exchanges. Thus, instead of issuing shares in Rupees, Indian companies can directly issue these in Dollars, Euros, etc. This has become possible due to the Gujarat International Financial Tec-City (“GIFT City”), International Financial Service Centre (IFSC). One of the most salient features of the GIFT City is that any entity set up here would be treated as a Person Resident outside India under the Foreign Exchange Management Act, 1999. Thus, while the GIFT City is physically located in India, it is for all regulatory purposes treated as a foreign territory. Let us understand how Indian companies can now directly list

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