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

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Revenue Secretary Tarun Bajaj on Wednesday said that the government may introduce legislative amendments in the parliament’s budget session to enable Indian companies to directly list certain prescribed classes of securities abroad, PTI reported. However, there are certain hurdles that need to be sorted out for making this a success. But direct listing of securities at the International Financial Services Centre (IFSC) by Indian entities is allowed, he adds.

Listing of Indian companies to increase competitiveness

At present, few Indian companies have American Depository Receipts (ADRs) that are traded in the US. Also, some corporates also have Global Depository Receipts (GDRs).

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

Later, amendments were made in Section 23 of the Companies Act 2013, which enables provisions to allow direct listing of Indian public companies in permissible foreign jurisdictions. Indian companies listing in foreign stock exchanges are expected to increase competitiveness and provide better access to capital, a broader investor base, and better valuations.

Then, the Companies (Amendment) Bill, 2020 was passed in September 2020, which permitted direct overseas listing of Indian corporates.