Direct listing outside India – Government sets into motion the relevant provisions

Direct listing outside India – Government sets into motion the relevant provisions

In a much awaited and an important move, the Government has notified Section 5 of the Companies (Amendment) Act, 2020, with effect from October 30, 2023. These provisions essentially dealt with permitting direct listing of Indian companies in offshore jurisdictions.

The enforced provisions provide for following:

• Enabling prescribed public companies to list their securities in foreign jurisdiction –

The prescribed class of public companies may issue such class of securities for the purposes of listing on permitted stock exchanges in permissible foreign jurisdictions or such other jurisdictions.

• Exemptions from certain provisions –

Additionally, the Central Government may, by notification, exempt any class or classes of public companies referred to above from any of the provisions related to:

(a) Chapter III – Prospectus and allotment of securities;

(b) Chapter IV – Share Capital and Debentures;

(c) Section 89, Section 90 – Beneficial owner and Significant Beneficial Owner related provisions;

(d) Section 127 – Failure to distribute dividends

The abovementioned has been notified vide the MCA notification dated October 30, 2023 (available here) and is effective from October 30, 2023.

ELP Comments

Although MCA has given a head start for the Indian public companies to directly list their securities in foreign stock exchanges, we now await the following: (a) prescribed class of public companies which are covered hereunder, (b) prescribed class of securities, (c) permitted stock exchanges, (d) permissible foreign jurisdictions or other jurisdictions (including if GIFT City is going to be covered), and the rules dealing with procedural requirements. In addition to above, wherever exemptions are granted, this will help expedite the process of listing and tap into international markets.

We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:

Manendra Singh, Partner – ManendraSingh@elp-in.com ;
Ambareen Khatri, Associate – AmbareenKhatri@elp-in.com

Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice. This document is not intended to address the circumstances of any individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.