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The ministry of corporate affairs (MCA), on Friday, said domestic technology companies planning foreign listing would not be considered listed in India and, therefore, need not follow rules prescribed by the regulator Securities and Exchange Board of India (SEBI) for listed companies, The Economic Times reported.

The government reportedly decided to take this step after several startups complained of complying to a string of authorities for overseas listing. This is because the SEBI listed companies are subject to stringent compliance norms and disclosures which makes it complicated for them to list on foreign bourses.

With the new rule in pipeline, any company that lists itself on a foreign bourse must only comply with the regulator of that country. For example, if company ‘A’ decides to get listed on US Stock Exchange, it will now be regulated by the United States Securities Exchange Commission (SEC) and won’t be a listed company in India. However, since the state of origin for ‘A’ remains India, it will still come under the purview of MCA and must follow national rules for unlisted companies. Only if ‘A’ itself decides to get listed in India alongside a foreign listing, it will need to comply with the rules of two market regulators.

Less disclosure requirements is the key advantage for unlisted companies over their listed counterparts in India. Apart from that, listed companies are also required to meet corporate government rules set by SEBI which is non-essential for unlisted companies. Till 2019, it was mandatory for Indian companies to first get listed here and issue depository receipts like ADRs and GDRs or opt for simultaneous listing both in India and overseas.

Final draft of the regulation still resides with the MCA and should be out soon.