Direct listing on exchanges at IFSC soon
- July 31, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Direct listing on exchanges at IFSC soon
Subject: Economy
Section: Capital Market
In News: Government takes decision to enable the direct listing of listed and unlisted companies on overseas exchanges at the IFSC (International Financial Services Centre).
Key Points:
- With this direct listing of securities by Indian public companies (both listed and unlisted) would be permissible in foreign jurisdictions.
Side Note:
- An unlisted public company and private companies can issue shares under Private Placement offer.
- Being a public limited company means that it offers shares to the general public and has limited liability. Its stock can be acquired by anyone, either privately or on a listing exchange.
- This is likely to enable start-ups and companies of like nature to access the global market through GIFT IFSC.
- This will also facilitate access to global capital and result in better valuation for Indian companies.
Present setup:
- At present, Indian companies can access overseas equity markets only through depository receipts or by listing their debt securities on foreign markets.
- In 2020, the Centre amended the Companies Act, allowing the direct listing of Indian companies on foreign stock exchanges, but the framework has not been put in place so far.
SEBI update:
- Government is also set to consolidate the laws dealing with the securities market in the country into a single securities market code.
- Move will consolidate the three different laws — the SCRA (Securities Contracts Regulation Act) of 1956, the SEBI Act of 1992, and the Depositories Act of 1996 into a single act with an updated and rationalised set of provisions.
Depository Receipts A depositary receipt (DR) is a negotiable certificate issued by a bank. It represents shares in a foreign company traded on a local stock exchange and gives investors the opportunity to hold shares in the equity of foreign countries. It gives them an alternative to trading on an international market. |