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DIRECT LISTING OF LISTED INDIAN
COMPANIES ON IFSC EXCHANGES
Working Group
Report
December 2023Direct Listing of Listed Indian Companies on IFSC Exchanges
TABLE OF CONTENTS
ABBREVIATIONS AND ACRONYMS ...................................................................................................... 3
SUBMISSION OF REPORT ....................................................................................................................... 7
ACKNOWLEDGMENTS ............................................................................................................................. 8
EXECUTIVE SUMMARY ............................................................................................................................ 9
CHAPTER 1: INTRODUCTION ............................................................................................................. 13
CHAPTER II: CONSTITUTION OF WORKING GROUP .................................................................. 21
CHAPTER III: GLOBAL BEST PRACTICES ........................................................................................ 27
CHAPTER IV: DIRECT LISTING - DEPOSITORY CONNECT MODELS ....................................... 32
MODEL 1 ..................................................................................................................................................................................33
MODEL 2 ..................................................................................................................................................................................36
CHAPTER V: REGULATORY AND OPERATIONAL ISSUES ........................................................... 40
FURTHER PUBLIC OFFER .................................................................................................................................................40
PREFERENTIAL ISSUE .......................................................................................................................................................42
RIGHTS ISSUE ........................................................................................................................................................................43
DIVIDEND ...............................................................................................................................................................................45
BONUS ISSUE .........................................................................................................................................................................45
MINIMUM PUBLIC SHAREHOLDING ...........................................................................................................................46
TAKEOVERS ............................................................................................................................................................................47
BUY-BACKS .............................................................................................................................................................................49
VOLUNTARY DELISTING ...................................................................................................................................................50
SCHEME OF ARRANGEMENT .........................................................................................................................................50
DISCLOSURES ........................................................................................................................................................................51
MARKET SURVEILLANCE .................................................................................................................................................51
INFORMATION SHARING BETWEEN DEPOSITORIES ..........................................................................................52
1Direct Listing of Listed Indian Companies on IFSC Exchanges
COOPERATION BETWEEN IFSCA AND SEBI ............................................................................................................52
REGULATORY ENABLERS FOR DIRECT LISTING ....................................................................................................52
COMPANIES ACT, 2013 ......................................................................................................................................................53
MAINTAINING REGISTER .................................................................................................................................................54
QUALIFIED INSTITUTIONAL PLACEMENTS .............................................................................................................56
PARTICIPATION OF INDIAN MUTUAL FUNDS .........................................................................................................57
MARKET MAKING ................................................................................................................................................................58
PRESS NOTE 3 COMPLIANCE .........................................................................................................................................59
TAXATION ...............................................................................................................................................................................59
FEM (NDI) RULES, 2019 ...................................................................................................................................................61
OTHER RECOMMENDATIONS – DEPOSITORY RECEIPTS OF UNLISTED INDIAN COMPANIES ON
IFSC EXCHANGES .................................................................................................................................................................62
CHAPTER VI: SUMMARY OF RECOMMENDATIONS ..................................................................... 66
ANNEXURE – 1: DIRECT LISTING: ANALYSIS BY SUB-GROUP .................................................. 74
2Direct Listing of Listed Indian Companies on IFSC Exchanges
ABBREVIATIONS AND ACRONYMS
Abbreviations / Acronyms Definitions
ADR American Depository Receipt
AIF Alternate Investment Fund
AIM Alternate Investment Market
AML Anti-Money Laundering
ANNA The Association of National Numbering Agencies
ASX Australian Securities Exchange
AUM Assets Under Management
BO Beneficial Owner
CDS Clearing and Depository Services, Inc.
CDSL Central Depository Services (India) Ltd
CFT Combating the Financing of Terrorism
CNY Chinese Yuan
COVID-19 Coronavirus Disease
DEA Department of Economic Affairs
DI Domestic Investor
Listing of equity shares of Indian Companies directly on
Direct Listing
international exchanges
DLOF Draft Letter of Offer
DP Regulations SEBI (Depositories and Participants) Regulations, 2018
DPS Detailed Public Statement
DR Depository Receipt
Foreign Currency Convertible Bonds and Ordinary Shares
DR Scheme 1993
(Through Depository Receipt Mechanism) Scheme, 1993
DR Scheme 2014 Depository Receipts Scheme, 2014
DTC Depository Trust Company
3Direct Listing of Listed Indian Companies on IFSC Exchanges
Abbreviations / Acronyms Definitions
EFI Eligible Foreign Investor
EU European Union
FCCB Foreign Currency Convertible Bond
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999
FPI Foreign Portfolio Investment
FPO Further Public Offer
GDR Global Depository Receipt
GIFT City Gujarat International Finance Tec-City
GoI Government of India
HK Hong Kong
HKD Hong Kong Dollar
ICSD International Central Securities Depository
IFSC International Financial Services Centre
IFSCA International Financial Services Centres Authority
IFSCA (Anti Money Laundering, Counter-Terrorist Financing
IFSCA AML CFT Guidelines
and Know Your Customer) Guidelines, 2022
IFSCA ILS Regulations IFSCA (Issuance and Listing of Securities) Regulations, 2021
India ICC India International Clearing Corporation (IFSC) Limited
IIDI India International Depository IFSC Limited
IMF International Monetary Fund
India INX India International Exchange (IFSC) Limited
INR Indian Rupee
IOSCO International Organization of Securities Commissions
IRDAI Insurance Regulatory and Development Authority
ISIN International Securities Identification Number
4Direct Listing of Listed Indian Companies on IFSC Exchanges
Abbreviations / Acronyms Definitions
IT Income Tax
IT Act Income Tax Act, 1961
ITR Income Tax Return
KYC Know Your Customer
LEI Legal Entity Identifier
LOF Letter of Offer
LSE London Stock Exchange
MCA Ministry of Corporate Affairs, Government of India
MMoU Multilateral Memorandum of Understanding
MoF Ministry of Finance, Government of India
MoU Memorandum of Understanding
MPE Mainland Private Enterprises
MPS Minimum Public Shareholding
Foreign Exchange Management (Non-debt Instruments) Rules,
NDI Rules
2019
NICCL NSE IFSC Clearing Corporation Limited
NOC No Objection Certificate
NRI Non-Resident Indian
NSDL National Securities Depository Limited
NSE National Stock Exchange
NSE IX NSE International Exchange (IFSC) Limited
NYSE New York Stock Exchange
PA Public Announcement
PAN Permanent Account Number
PFRDA Pension Fund Regulatory and Development Authority
QIP Qualified Institutional Placement
5Direct Listing of Listed Indian Companies on IFSC Exchanges
Abbreviations / Acronyms Definitions
RBB Reverse Book Building
RBI Reserve Bank of India
RE Rights Entitlement
RTA Registrar and Transfer Agents
SCR Rules Securities Contracts (Regulation) Rules, 1957
SEBI Securities and Exchange Board of India
Securities and Exchange Board of India (Buy-back of Securities)
SEBI Buy-back Regulations
Regulations 2018
Securities and Exchange Board of India (Delisting of Equity
SEBI Delisting Regulations
Shares) Regulations, 2021
Securities and Exchange Board of India (Issue of Capital and
SEBI ICDR Regulations
Disclosure Requirements) Regulations, 2018
Securities and Exchange Board of India (Listing Obligations and
SEBI LODR Regulations
Disclosure Requirements) Regulations, 2015
Securities and Exchange Board of India (Prohibition of
SEBI PFUTP Regulations Fraudulent and Unfair Trade Practices relating to Securities
Market) Regulations, 2003
Securities and Exchange Board of India (Prohibition of Insider
SEBI PIT Regulations
Trading) Regulations, 2015
Securities and Exchange Board of India (Substantial Acquisition
SEBI SAST Regulations
of Shares and Takeovers) Regulations, 2011
SME Small and Medium Enterprises
SOP Standard Operating Procedure
TSX Toronto Stock Exchange
UK United Kingdom
US SEC U.S. Securities and Exchange Commission
USA Unites States of America
USD United States Dollar
VWAP Volume-weighted Average Price
6Direct Listing of Listed Indian Companies on IFSC Exchanges
SUBMISSION OF REPORT
December 20, 2023
Shri K. Rajaraman,
Chairperson
International Financial Services Centres Authority (IFSCA)
GIFT SEZ, Gift City, Gandhinagar, Gujarat – 382355
Dear Sir,
We are pleased to submit report of the “Working Group on Direct Listing of Listed
Indian Companies on IFSC Exchanges”. In line with its mandate, the Working Group undertook
a detailed study of global best practices and thoroughly examined the current legal and
regulatory framework. Based on the global best practices, the Working Group has proposed
models for dual listing of Indian companies in both jurisdictions through depository connect.
The Working Group has also made recommendations on the regulatory issues for
operationalizing Direct Listing.
We thank you for entrusting this responsibility to the Working Group. We hope that the
proposals and recommendations made by the Working Group will contribute towards
implementation of the vision of Government of India to facilitate raising of foreign capital into
India and integrating the Indian companies with the international financial market through
GIFT IFSC acting as a gateway.
Yours sincerely,
Praveen Trivedi
Chair
Sd/- Sd/-
S. V. M. D. Rao Yogita Jadhav Pratiyush Kumar N. K. Dua
Member Member Member Member
Bahram Vakil Ashishkumar Chauhan Nehal Vora V. Balasubramaniam
Member Member Member Member
Neeraj Kulshrestha Kaushal Sampat S. Venkatraghavan Mahavir Lunawat
Member Member Member Member
Raghwendra Pande Rajesh Sharma Arjun Prasad
Member Member Member Secretary
7Direct Listing of Listed Indian Companies on IFSC Exchanges
ACKNOWLEDGMENTS
The Working Group would like to convey its deep gratitude to the representatives of
DEA, MCA, SEBI, IFSCA and all the market participants for their valuable suggestions and
insights in completing this assignment in a timely manner.
The Working Group would like to commend Shri Ankit Bhansali, General Manager,
IFSCA; Shri Abhishek Rozatkar, Assistant General Manager, SEBI; and Shri Ankur Bishnoi,
Assistant General Manager, SEBI for their insightful contributions in analyzing and making
recommendations on the various legal and regulatory aspects involved in this work. Their
dedication and hard work were instrumental for the Working Group to meet the tight
deadlines and produce a comprehensive and informative report.
The Working Group would like to thank Shri N. K. Dua, Joint Director, MCA; Shri
Pratiyush Kumar, Joint Director, DEA; and Shri Neeraj Kumar, Assistant Director, DEA for their
support and contributions in this work.
The Working Group would like to acknowledge and express its gratitude to Shri
Shubham Goyal, Assistant General Manager and Shri Akash Boddeda, Assistant Manager from
IFSCA, for their contributions to the research, analysis and drafting of this report.
The Working Group would like to express its appreciation to Shri Lionel D’Almeida, Shri
Bharat Mordani and Ms. Aratrika Choudhuri from AZB & Partners; Shri Avishkar Naik from
NSE; Shri Dharmesh Tejani from NSE IX; and Shri Samarth Jagnani from Morgan Stanley for
their extensive assistance on making recommendations on the legal and operational matters
for implementing direct listing of equity shares of listed Indian companies on IFSC exchanges.
The Working Group places on record its gratitude to Shri K. Rajaraman, Chairperson,
IFSCA for providing his continuous guidance and support to the Working Group.
8Direct Listing of Listed Indian Companies on IFSC Exchanges
EXECUTIVE SUMMARY
India is currently the fifth-largest global economy and is expected to become the third-
largest economy in the world within this decade. The Government of India has set the target
for India to become a developed country by 2047. The financial markets in India will have to
play a significant role in the growth story of India in the coming years. With a $4 trillion stock
market capitalization and the world's highest number of listed domestic companies, India
offers appealing investment prospects for the global investor community. In this context, GIFT
IFSC is well positioned to act as a gateway for attracting foreign capital into India and
contribute towards further accelerating development of the country.
Accessing global capital markets is crucial for companies to raise funds, offer liquidity
to investors, and create wealth. Currently, the Indian companies are permitted to raise equity
capital from foreign investors through listing on the domestic stock exchanges or through
international listing in the form of depository receipts. The Government of India has now
announced the decision to further ease raising of foreign capital by permitting the Indian
companies to directly list their equity shares on the stock exchanges in GIFT IFSC. The
proposed Direct Listing is envisaged to emerge as a dynamic avenue for Indian companies
(including start-ups), as this would enhance Indian companies' ability to access global funds,
diversify their investor base, increase their visibility and provide opportunities for better
valuations.
The announcement by the Government of India to permit Direct Listing of equity
shares of Indian companies on the stock exchanges in IFSC also included companies that are
already listed on the domestic exchanges in India. This Working Group has been constituted
to make recommendations on the various legal and regulatory issues involved in
operationalizing the proposed Direct Listing of already listed Indian companies.
The Working Group studied the best practices for listing and raising capital by
companies across the globe in various jurisdictions viz., USA, Canada, United Kingdom,
European Union, Australia, New Zealand, Hong Kong etc. The practices followed in these
international jurisdictions for connecting the markets for facilitating dual listing were also
studied.
The Working Group believes that one of the important operational aspect of the
proposed Direct Listing is the connect between the depositories for facilitating participation
of investors in the same company in two separate jurisdictions. The Working Group, after
extensive deliberations, has recommended the following approaches for connecting the
capital markets of India and IFSC for the proposed Direct Listing of Indian companies:
1. Model 1 - Direct Depository Connect
In this model, the depositories in India and IFSC will be required to establish a direct
connect to enable issue of new equity shares directly on the depository in IFSC and to
9Direct Listing of Listed Indian Companies on IFSC Exchanges
enable transfer of existing equity shares1 from the depository in India to the depository
in IFSC. The equity shares of Indian companies issued and listed on IFSC exchanges will
therefore be held directly by the shareholders in their demat accounts maintained with
the depository in IFSC in the segregated account structure. The depositories in India
and IFSC are technologically advanced and capable of directly connecting in an efficient
manner. This model can be implemented in a short term with the regulatory support
and enablers by the regulators viz. SEBI and IFSCA.
2. Model 2 - Nominee Account Structure
The nominee account structure is prevalent in many international financial centres,
wherein a third party holds assets as a nominee of the beneficial owners. The nominee
account structure has been successful in connecting markets for facilitating dual listing
in several jurisdictions (including USA - Canada).
Accordingly, the following models have been proposed:
a) Model 2(A) - Nominee Account by IFSC Depository
In this model, the depository in IFSC will be required to open a nominee account
with Indian Depositories (NSDL and CDSL), as a nominee on behalf of all the
shareholders in IFSC, for facilitating trading of equity shares of Indian
companies on the IFSC exchanges. However, this model requires a shift of the
depository from the current “segregated” account structure to “nominee”
account structure. This would require amendments in Depositories Act, 1996
and the regulations notified by SEBI and IFSCA and therefore can be
implemented in the medium to long term.
b) Model 2(B) – Issuance on ICSDs
The International Central Securities Depositories (ICSDs) in most international
financial centres operate in the nominee account structure. The foreign
securities issued by Indian companies, including foreign currency bonds,
masala bonds, ADRs/ GDRs are already being held by the ICSDs in the nominee
account structure. Considering that the shift of the IFSC depository towards
nominee account structure requires several amendments and can be
implemented only in the medium to long term, the direct listing of equity shares
of Indian companies may be allowed through globally recognised ICSDs.
While the Working Group has proposed the above models, the Working Group suggests
that the preference should be to implement direct listing through the depository in IFSC.
The Working Group has also studied various regulatory and operational matters
relating to dual listing of Indian companies and made its recommendations in the report.
1 If the issue is an Offer for Sale by existing shareholders of the company
10Direct Listing of Listed Indian Companies on IFSC Exchanges
While detailed recommendations have been made in the report, a brief summary of the key
recommendations is mentioned below:
a) Activities by dual listed companies: The recommended approach on the various
activities of the dual listed companies has been brought out in brief in the below
diagram:
b) Simultaneous activities in both jurisdictions: In respect of simultaneous activities in
both jurisdictions, since the companies are primarily listed on Indian exchanges, IFSCA
may mainly rely upon the requirements specified in the regulations notified by SEBI
with such exceptions as indicated in the report. The issuer may be permitted to file
common documents in this regard.
c) Minimum Public Shareholding: The issuer may be required to maintain minimum public
shareholding separately in India and IFSC.
d) Cooperation and Information Sharing
a. The depositories in IFSC may be required to share information with the Indian
depositories/ RTA for reconciliation of shares in India and monitoring of foreign
limits.
b. The stock exchanges in India and IFSC may be required to have necessary
arrangements/ agreements to ensure that all the disclosures made on the
Indian exchanges are disclosed on the IFSC exchanges.
11Direct Listing of Listed Indian Companies on IFSC Exchanges
c. The stock exchanges in IFSC may be required to build necessary infrastructure
in the medium to long term to make the necessary data available to IFSCA and
also to SEBI on need basis.
d. IFSCA and SEBI may consider having a bilateral MoU for cooperation and
exchange of information.
e) Liquidity / Investors
a. The Indian mutual funds may be permitted to participate in Direct Listing. A
separate limit for IFSC may be considered (1% of total AUM of the domestic
mutual fund industry).
b. The broker dealers, including IFSC entities, may be permitted to participate as
market makers in Direct Listing.
f) Companies Act, 2013 – The rules under section 23(3) and (4) of Companies Act, 2013
may be notified for implementation of Direct Listing in IFSCs.
g) NDI Rules: The necessary amendments may be notified/ carried out in the NDI Rules
to permit cross-jurisdiction issuance and trading of equity shares of Indian companies
on IFSC exchanges and other activities of such dual listed companies as identified in
the report.
h) Taxation: There are few tax related suggestions to further incentivize non-resident
entities to participate in the Direct Listing.
These recommendations are aimed at facilitating implementation of direct listing,
providing Indian companies with a pathway to access global capital markets through IFSC
Exchanges.
12Direct Listing of Listed Indian Companies on IFSC Exchanges
CHAPTER 1: INTRODUCTION
I. BACKGROUND
In 2022, India celebrated its 75th year of Independence and has become the fifth
largest economy in the world, largely due to its economic liberalization policies. These
policies have made India more market-oriented, increased the role of private capital, and
boosted India's global competitiveness.
While most advanced economies are facing an economic slowdown, chronic
shortages, high inflation and aging population, the Indian economy is acknowledged to be
the fastest-growing large economy by major multilateral organisations like IMF, World
Bank etc. India has attained critical mass as the fifth largest economy in the world and is on
its path to become the world’s third-largest economy in this decade, overtaking both
Germany and Japan. Also, the Government of India has set for itself the goal of becoming a
“developed” economy by 2047.
Financial markets play a vital role in connecting investors with firms that need
capital to finance their projects. Firms seek the lowest possible cost of capital because this
allows them to undertake more projects that are financially viable and lead to greater
investment. Equity capital from global investors is often cheaper than domestic sources
because global investors are more diversified and have a wider range of investment
options.
India’s total stock market capitalization is more than $ 4 trillion, making it the fifth
largest in the world2. This is a significant achievement, given that India was a relatively
closed economy just a few decades ago. With highest number of domestic listed companies
in the world, India offers both foreign individual investors and foreign institutional
investors attractive investment opportunities.
Source: CEICData.com
2 As on December 15, 2023
13Direct Listing of Listed Indian Companies on IFSC Exchanges
The international financial services centre can play a significant role in further
development of the financial markets and attracting capital flows in India. The Government
of India established International Financial Services Centres Authority under the
International Financial Services Centres Authority Act, 2019 passed by the Union
Parliament.
The IFSCA has a statutory mandate to develop and regulate financial institutions,
financial services, and financing products within the IFSCs in India. The Government of
India, with effect from October 01, 2020, granted IFSCA the regulatory powers of four
domestic regulators namely Reserve Bank of India (RBI), Securities and Exchange Board of
India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and
Pension Fund Regulatory and Development Authority (PFRDA) for the IFSCs in India.
In this context, this may, therefore, be an opportune time to consider further
liberalizing the equity capital raising framework by allowing companies listed in India to
access foreign capital by enabling them to directly list their equity shares on the IFSC
exchanges.
II. ACCESSING GLOBAL CAPITAL MARKETS
Companies issue securities to raise capital, provide investors with liquid
investments, and create wealth. Listing securities on a stock exchange is essential for
achieving these goals, as it provides liquidity, fair valuation, and transparency in
transactions. Companies are free to choose where to list their securities, but they typically
list on a domestic exchange. However, a company may also choose to list on a foreign
exchange, either as a substitute for or a supplement to domestic listing. Globally, many
companies are interested in overseas listing because it has the potential to improve their
ability to raise equity, expand their shareholder base, increase brand visibility, and enhance
trading liquidity.
The firms access global capital markets usually in either of the following ways:
a. Depository Receipts (DRs)
b. Direct Listing3
1) Depository Receipts
Globalization has led to companies looking beyond their borders to raise capital, and
investors are now interested in new investment opportunities and geographically diverse
portfolios. This trend has led to the development of depository receipts (DRs), such as
American Depository Receipts (ADRs) and Global Depository Receipts (GDRs).
DRs are financial instruments that allow investors to trade shares of foreign
companies on their domestic stock exchanges. ADRs are traded on US stock exchanges,
while GDRs are traded on stock exchanges in other countries. DRs offer a number of
advantages to both companies and investors. DRs have become a popular way for
3 Direct Listing for the purpose of this report means listing of equity shares directly on international exchanges
14Direct Listing of Listed Indian Companies on IFSC Exchanges
companies from emerging economies to internationalize, as they allow them to raise capital
from foreign investors without having to list their shares on a foreign stock exchange.
For investors, DRs offer a convenient and affordable way to invest in foreign
companies without having to open a foreign brokerage account or deal with foreign
exchange risks. DRs also allow investors to diversify their portfolios and gain exposure to
different markets and sectors.
Post economic liberalisation, Indian companies started to embrace DRs in early
1990s. It was facilitated by the Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depository Receipt Mechanism) Scheme, 1993 (“DR Scheme 1993”). This scheme
was particularly popular among companies in the new information technology sector.
However, the wave of DR listings by Indian Companies did not last long, and a steep decline
was observed in the subsequent years.
Later, to revive issuances of DRs by Indian companies, Ministry of Finance (“MoF”)
constituted a committee in 2013, to review comprehensively the DR Scheme, 1993, under
the chairmanship of Shri M. S. Sahoo (“Sahoo Committee”). The Sahoo Committee
submitted its report titled, Report of the Committee to Review the FCCBs and Ordinary Shares
(Through Depository Receipt Mechanism) Scheme, 1993 in November 2013. The Sahoo
Committee proposed significant rationalisation of the DR scheme to enable Indian
companies to tap global markets. The committee recommended that the DR Scheme 1993
should be replaced with a new scheme that would provide greater flexibility to Indian
companies to raise funds through the issuances of DRs.
Based on the recommendations of the Sahoo Committee, MoF notified the
Depository Receipts Scheme, 2014 (“DR Scheme 2014”), on October 21, 2014 which came
into effect from December 15, 2014. Subsequently, SEBI issued a circular dated October 10,
2019, notifying “Framework for Issuance of Depository Receipts” providing the revised
framework for issuance of DRs under the DR Scheme 2014. However, the issuers have
stayed away from DRs with no DR issuance in the last several years.
2) Direct Listing of equity shares on international exchanges
Sahoo Committee in its report also mentions about Direct Listing of equity shares.
According to the Sahoo Committee report, Direct Listing usually are of the following types:
a) Primary: A firm not listed on any domestic exchange lists its shares on a foreign
stock exchange. It is subject to only the foreign jurisdiction listing rules.
b) Secondary: A firm listed on a domestic exchange, subsequently lists its shares on
a foreign stock exchange. It is principally regulated by the rules of its domestic
jurisdiction.
c) Dual primary listing: A firm listed on a domestic exchange subsequently lists its
shares on a foreign stock exchange and is equally subject to the listing rules of
both jurisdictions.
15Direct Listing of Listed Indian Companies on IFSC Exchanges
While Sahoo Committee gave recommendations for the review of earlier DR Scheme,
it mentioned about “Direct Listing of Indian companies abroad” and “Dual listing of Indian
Companies” as amongst areas of work required for further benefiting the Indian companies.
Subsequently, SEBI constituted an ‘Expert Committee for listing of equity shares of
companies incorporated in India on foreign stock exchanges and of companies incorporated
outside India, on Indian stock exchanges’ on June 12, 2018. The broad terms of reference of
the Committee were to:
a) Examine in detail the economic case for permitting direct listing of Indian
companies overseas and foreign companies on Indian stock exchanges;
b) Examine various legal, operational and regulatory constraints in facilitating
Indian companies to directly list their equity shares on foreign stock exchanges
and foreign companies to list their equity shares on Indian stock exchanges; and
c) Make recommendations for a suitable framework in which to facilitate such
direct listing.
This Expert Committee submitted its report on December 04, 2018. The report
inter-alia highlights the following benefits to the Indian companies regarding the proposed
Direct Listing:
a) Alternate source of capital: Companies incorporated in India can benefit from
accessing capital markets outside of their country of incorporation for various
reasons. Many of these benefits are attained from a reduction in the cost of
capital in advanced economies with developed financial markets. Given inherent
inflation and relatively smaller domestic institutional and non-institutional
pools of capital, the cost of capital in India is still higher vis-à-vis that for a
foreign corporate thereby putting the Indian company at a disadvantage in the
marketplace. Thus, a simple and principle based international listing regime
which enables all companies incorporated in India to raise capital in the market
which optimizes cost and provides the greatest benefits in terms of value,
quantum, quality and branding is the need of the hour.
b) Broader investor base: Listing on foreign stock exchanges broaden and
diversify the pool of investors that are able to acquire and trade the company’s
shares, which increases the demand pool for the company's shares and helps to
decrease the cost of capital. For example, a company incorporated in India listed
in the United States would be able to access numerous investment funds that
would otherwise be prevented by their internal investment criteria from
investing in companies not listed in the United States. Such listings also enable
companies to diversify their capital-raising activities rather than being reliant
only on their domestic market. In addition, Indian start-up or emerging-growth
companies, for example, will be able to access capital from investors overseas
that may be more receptive to their securities than Indian investors, who have
typically focused on companies with proven track records of profitability and
16Direct Listing of Listed Indian Companies on IFSC Exchanges
growth, and have generally exhibited less appetite for start-up or emerging-
growth companies.
c) Better valuation: Companies listing on foreign stock exchanges with
sophisticated asset management infrastructure generally expect to obtain more
accurate valuations on their securities than in their domestic capital markets.
For example, overseas listings enable companies to access specialized industry-
specific investor classes, such as high-tech investors, who possess institutional
sectoral expertise and are thus better able to value these securities. Listings on
foreign stock exchanges can also increase analyst coverage for the listed shares
and facilitate clearer comparisons against other peer companies that are listed
overseas, each of which contribute toward more accurate benchmarking and
valuations.
d) Other strategic benefits: Additionally, companies incorporated in India may
derive benefits from listing on a foreign stock exchange for other strategic
reasons, including facilitation of their international employee compensation
strategies, increase in their brand awareness and visibility, and by gaining a
currency of exchange with which to pursue their international expansion plans.
Accordingly, the Expert Committee made the following recommendations with
regard to Direct Listing of Indian Companies:
a) Listing may be allowed only on specified stock exchanges in Permissible
Jurisdictions. Detailed criteria for identifying Permissible Jurisdictions have been
suggested. Based on the criteria, the initial list of Permissible Jurisdictions along
with specified stock exchanges has also been recommended.
b) The RBI may be requested to introduce Part B to Schedule 1 to FEMA 20R that may
set out the regulatory framework for purchase by a person resident outside India
of equity shares of a company incorporated in India listed on a foreign stock
exchange.
c) The MCA may be requested to issue a clarification (similar to the general circular
dated August 03, 2016 issued for masala bonds) that Chapter III of the Companies
Act, 2013 shall not apply to the listing of equity shares of companies incorporated
in India on foreign stock exchanges.
d) Listing of unlisted companies incorporated in India on foreign stock exchanges
would be governed by the listing framework of the concerned Permissible
Jurisdiction. The relevant Indian laws like Companies Act would also continue to
apply to such companies. As regards listing of a listed Indian company on foreign
stock exchanges, such a company shall comply, at all times, with rules/
regulations/ laws/ initial and continuous listing/ disclosure requirements, as are
applicable to companies listed in India. In case of variation in the compliance
obligations/ requirement for additional compliances in Permissible Jurisdiction, a
comparative analysis of the provisions that are applicable in India along with
17Direct Listing of Listed Indian Companies on IFSC Exchanges
compliance of the same and the requirements applicable in the Permissible
Jurisdiction shall be given by the company.
e) The KYC and AML framework existing in Permissible Jurisdictions may be taken as
acceptable standards for compliance with KYC and AML norms.
f) The beneficial ownership requirement, provided under the Companies (Significant
Beneficial Owners) Rules, 2018, can be met by submitting the information as
provided by the investors in the manner prescribed in the Permissible Jurisdictions.
g) The matter relating to tax on issuance and transfer of equity shares of companies
incorporated in India listed on a foreign stock exchange and related reporting
obligations, may be taken up with the Department of Revenue for providing clarity.
For this purpose, reference may be drawn to ADR / GDR regime.
h) The Department of Revenue may be requested to take necessary steps for clarifying
the applicability of section 56 of the Income Tax Act, 1961 in case of transactions
pertaining to listing of equity shares of companies incorporated in India on foreign
stock exchanges including relevant amendments in the tax valuation rules.
i) The relevant accounting standards of the country of listing should be applicable.
The accounting standards in the country of listing may require
preparation/presentation of consolidated financial statements either in
accordance with accounting/auditing standards applicable to domestic
companies in such jurisdiction or comparable global standards. However, the
company would be required to prepare its consolidated financial statements in
accordance with applicable Indian Accounting Standards, as applicable from time
to time for statutory reporting purposes.
Subsequently, the Companies (Amendment) Act, 2020 was notified on September
28, 2020 with the following insertions under section 23 of Companies Act, 2013:
"(3) Such 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, as may be prescribed.
(4) The Central Government may, by notification, exempt any class or classes of
public companies referred to in sub-section (3) from any of the provisions of this Chapter,
Chapter IV, section 89, section 90 or section 127 and a copy of every such notification
shall, as soon as may be after it is issued, be laid before both Houses of Parliament."
The Ministry of Corporate Affairs (MCA) subsequently issued a notification dated
October 30, 2023 appointing October 30, 2023 as the date on which the provisions of
section 5 of the Companies (Amendment) Act, 2020 coming into force. Accordingly, section
23(3) and (4) of Companies Act, 2013 have come into force w.e.f. October 30, 2023.
18Direct Listing of Listed Indian Companies on IFSC Exchanges
III. GIFT IFSC ECOSYSTEM
The International Financial Services Centres Authority (IFSCA) has been established
by the Government of India with a mandate to develop and regulate financial products,
financial services, and financial institutions in the international financial services centres
(IFSCs) in India. One of the primary goals of IFSCA is to position the IFSC as the gateway for
India's international financial flows, both inbound and outbound.
In relation to GIFT IFSC, the Hon’ble Prime Minister of India has stated his vision as
under:
"My vision is that in ten years from now, Gift city should become the price setter for at least a
few of the largest traded instruments in the world, whether in commodities, currencies,
equities, interest rates or any other financial instrument."
Hon'ble Prime Minister of India on January 09, 2017
“GIFT City is an important gateway to connect India with global opportunities. When you
integrate with GIFT City, you will integrate with the whole world.”
Hon’ble Prime Minister of India on July 29, 2022
“We want to make GIFT City the Global Nerve Center of New Age Global Financial and
Technology Services.”
Hon’ble Prime Minister of India on December 09, 2023
IFSCA, in consultation with the stakeholders, has been working on several proposals
including introduction of new financial products and financial services for creating a
vibrant ecosystem for capital markets in the IFSC. In this context, one of the proposals is to
enable direct listing of listed Indian companies on the IFSC exchanges. This is a significant
proposition as GIFT IFSC is an international centre with transactions in foreign currency
and may attract demand from investors across the world.
IFSC’s Regulatory Ecosystem
IFSCA has put in place all the necessary regulatory ecosystem to facilitate listing of
Companies on IFSC Exchanges. On July 16, 2021, it has notified the IFSCA (Issuance and
Listing of Securities) Regulations, 2021 ("IFSCA ILS Regulations"), a unified framework for
the listing of various securities, including by Indian companies. These regulations also have
a dedicated chapter on listing start-ups and SMEs to enable smaller companies to raise
foreign capital with ease, compared to normal listing.
The financial market ecosystem established in GIFT-IFSC currently includes:
19Direct Listing of Listed Indian Companies on IFSC Exchanges
a) Capital Market Ecosystem:
Exchanges: The international stock exchanges in the IFSC namely India
International Exchange (IFSC) Limited (“India INX”) and NSE IFSC Limited
(“NSE IX”) have been set up by BSE and NSE respectively and these exchanges
have best-in-class infrastructure to facilitate trading of securities in IFSC.
Clearing Corporations: There are two clearing corporations in the IFSC
namely (a) India International Clearing Corporation (IFSC) Limited (India
ICC) providing clearing and settlement services to India INX; and (b) NSE
IFSC Clearing Corporation Limited (NICCL) providing clearing and
settlement services to NSE IX.
Depository: There is a fully functional international depository in IFSC
namely, India International Depository IFSC Limited (IIDI).
b) Capital Market Intermediaries: There are several capital market
intermediaries such as broker dealers/trading members, clearing members,
depository participants, custodians, investment bankers etc. in the IFSC.
c) Banking Ecosystem: There are more than 25 banking units licensed by IFSCA in
GIFT IFSC, including several global banks.
In addition, the transactions on the stock exchanges in IFSC are in foreign currency,
providing ease of doing business to the foreign investors. The stock exchanges in IFSC have
extended trading hours (more than 20 hours in a day) catering to investors of all important
jurisdictions in the world and providing greater flexibility and convenience.
20Direct Listing of Listed Indian Companies on IFSC Exchanges
CHAPTER II: CONSTITUTION OF WORKING GROUP
The Hon’ble Union Minister of Finance and Corporate Affairs of India on July 28,
2023, announced the decision of the Government to allow the direct listing of Indian
Companies on IFSC Exchanges (“Direct Listing”). The press release issued by Ministry of
Finance dated July 28, 20234 in this regard inter alia mentions that –
“The Finance Minister announced that the Government has taken a decision to enable direct
listing of listed/unlisted companies on IFSC exchanges, which will be operationalised shortly
enabling start-ups and companies of like nature to access global market through GIFT IFSC.”
In order to operationalize the announcement of Hon’ble FM, the following key
enablers have been identified for enabling Direct Listing of Indian Companies on IFSC
Exchanges:
Sl. Legal Framework Authority Remarks
No.
1 Direct Listing of Equity Shares of Companies DEA Required for both
Incorporated in India on International Exchanges unlisted and listed
Scheme, 2023 (“Direct Listing Scheme”) Indian companies
2 Companies (Listing of Equity Shares in Permissible MCA Required for both
Jurisdictions) Rules, 2023 (“LEAP Rules”) unlisted and listed
Indian companies
[Rules u/s 23(3) of Companies Act, 2013]
3 Amendment to the Foreign Exchange Management DEA and Required for both
(Non-debt Instruments) Rules, 2019 RBI unlisted and listed
Indian companies
4 SEBI Framework including amendment to the SEBI Listed Companies
regulations
5 IFSCA Framework including amendment to the IFSCA Required for both
regulations unlisted and listed
Indian companies
Further, during the meeting held under the chairpersonship of Hon’ble Union
Minister of Finance and Corporate Affairs of India at GIFT IFSC, on 19.08.2023, the
following action points related to Direct Listing were also decided:
“SEBI shall expedite the framework to enable direct listing of equity shares of listed Indian
companies. A working group needs to be set up by IFSCA and SEBI with a strict timeline to
streamline and identify all the operational issues and agreements needed between
exchanges/depositories.”
4 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1943686
21Direct Listing of Listed Indian Companies on IFSC Exchanges
Accordingly, as advised by the Department of Economic Affairs (DEA), Government
of India, IFSCA constituted a working group on “Direct Listing of Listed Indian Companies on
IFSC Exchanges” (“Working Group”), in consultation with SEBI on August 30, 2023 with the
following terms of reference:
a. To make recommendations for operationalising direct listing of equity
shares of listed Indian Companies on IFSC Exchanges;
b. To facilitate development of systems for regular sharing of information
between regulators, exchanges and depositories;
c. To study global best practices on operational aspects relating to listing of
equity shares on domestic and overseas exchanges and make
recommendations for desired regulatory ecosystem in IFSC;
d. To make recommendations for necessary changes in the existing legal
framework, including securities and company law, to facilitate direct listing;
e. To make recommendations for regulatory cooperation and monitoring
compliance in respect of companies listed in both jurisdictions;
f. To make recommendations to facilitate ease of doing business for non-
resident investors to participate in direct listing with the objective of
attracting foreign capital in India through IFSC.
The members of the Working Group are as follows:
1. Shri Praveen Trivedi, Executive Director, IFSCA (Chair)
2. Shri S. V. M. D. Rao, Executive Director, SEBI
3. Smt. Yogita Jadhav, General Manager, SEBI
4. Shri Pratiyush Kumar, Joint Director, DEA
5. Shri N. K. Dua, Joint Director, MCA
6. Shri Bahram Vakil, Founder and Senior Partner, AZB & Partners
7. Shri Ashishkumar Chauhan, MD & CEO, NSE
8. Shri Nehal Vora, MD & CEO, CDSL
9. Shri V. Balasubramaniam, MD & CEO, NSE IX
10. Shri Neeraj Kulshrestha, MD & CEO, NICCL
11. Shri Kaushal Sampat, MD & CEO, IIDI
12. Shri S. Venkatraghavan, AIBI Representative
22Direct Listing of Listed Indian Companies on IFSC Exchanges
13. Shri Mahavir Lunawat, MD, Pantomath Capital Advisors Pvt. Ltd.
14. Shri Raghwendra Pande, EVP, ICICI Securities Ltd.
15. Shri Rajesh Sharma, EVP & Head Custody, HDFC Bank Limited
16. Shri Arjun Prasad, General Manager, IFSCA
Shri Ankit Bhansali, General Manager, IFSCA; Shri Samarth Jagnani, Managing
Director, Global Capital Markets, Morgan Stanley; Shri Ankur Bishnoi, Assistant General
Manager, SEBI; Shri Abhishek Rozatkar, Assistant General Manager, SEBI; and Shri Lionel
D’Almeida, Senior Partner AZB and Partners, were invited to participate in the meetings of
the Working Groups.
PROCESS FOLLOWED
The Working Group held its first meeting on September 08, 2023. During the first
meeting, the members discussed on the global best practices on international listings
followed in jurisdictions such as USA, Canada, UK, Europe, Australia and Hong Kong. It was
informed that there are mainly two approaches followed globally for dual listings:
a) Same class of shares listed on multiple exchanges
Some jurisdictions have developed well established links between depositories
to facilitate trading in cross-border jurisdictions.
b) Different class of shares for cross-border listings (followed in Hong Kong - China)
The companies incorporated in China have ‘A’ shares for listing on exchanges in
Mainland China (such as Shanghai and Shenzhen) and ‘H’ shares for listing on
Hong Kong Exchange. While ‘A’ shares are traded in Renminbi, ‘H’ shares are
traded in Hong Kong Dollar. Therefore, there are two different markets for listing
of different class of equity shares of the same company on cross-border
exchanges.
Further, Hong Kong has also been successful in attracting listings of companies
formed by Chinese entities but incorporated outside of China such as Red Chip
companies and Mainland Private Enterprises.
During the first meeting, Working Group principally agreed to consider the
possibility of adopting the approach followed in China/Hong Kong with two different
markets for listing of equity shares of Indian companies.
Several regulatory / operational issues were also identified during the meeting viz.
minimum public shareholding, SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 (SAST Regulations), shareholders’ approvals / exercise of voting rights
for various resolutions, applicability and monitoring of various foreign limits (FDI, FPI) etc.,
participation of NRIs, mechanisms in place for flow of information between exchanges
23Direct Listing of Listed Indian Companies on IFSC Exchanges
(Indian and IFSC) and between Depositories (Indian and IFSC) for various regulatory
purposes, Qualified Institutional Placements (QIPs), issues related to onboarding of non-
residents in IFSC.
Working Group also formed two sub-groups –
a) First sub-group was formed to study and recommend on the regulatory
and operational issues relating to Direct Listing;
b) Second sub-group was formed to study and recommend mechanism
relating to QIPs and Listing without IPOs.
The second meeting of the Working Group was held on September 14, 2023
wherein the following issues were discussed:
a) Different Class of Shares5
i. The issues relating to creation of different class of shares having pari-
passu voting rights with trading in different currencies and markets i.e.
domestic and IFSC, were discussed. It was discussed that necessary
clarifications may be required under the provisions of Companies Act,
2013 and Rules made thereunder for issuance and listing of two classes
of shares.
ii. The approval process for converting shares from Class ‘A’ shares to
Class ‘B’ Shares may also be specified. Further, it was suggested that the
fungibility/ conversion of Class ‘B’ Shares to Class ‘A’ Shares may also
be permitted, so as to enable the companies which are listed on IFSC
exchanges, to subsequently list on Indian exchanges.
b) Maintaining register / Depository
In terms of section 88(3) of Companies Act, 2013, the register and index of
beneficial owners maintained by a depository are deemed to be the
corresponding register and index for the purposes of Companies Act, 2013.
It was agreed that register maintained by the Indian and IFSC depositories
would be the deemed registers for the purpose of compliance with section
88.
c) Mechanism similar to ADRs / GDRs
In this context, it was mentioned that currently the equity shares are being
held by the Indian Depositories. The mechanism for converting these
equity shares into Class ‘B’ shares and making them available on IFSC
depository may be developed. It was suggested that the current
mechanism for ADRs/ GDRs may also be explored and instead of reducing
5 For the purpose of discussion in the Working Group, Class A refers to equity shares listed in India and Class B
refers to equity shares listed in IFSC Exchanges.
24Direct Listing of Listed Indian Companies on IFSC Exchanges
Class ‘A’ shares while conversion, the Indian depositories may continue to
hold the underlying shares (equivalent to Class ‘B’ Shares) in the Indian
Depository. This approach will help in reconciliation of the total shares and
ease the process of listing. However, it was felt that the implications of this
approach on the company’s balance sheet and other legal issues need to be
examined.
Accordingly, it was agreed that the sub-group will discuss this issue in
more detail and make its recommendations to the Working Group.
d) Several other regulatory issues such as applicability of regulations (SEBI
SAST Regulations, SEBI Buy-back Regulations, SEBI LODR Regulations,
SEBI Delisting Regulations, SEBI PIT Regulations and SEBI PFUTP
Regulations), minimum public shareholding, market surveillance, Unique
Identifier, Information sharing between depositories, compliance with
Press Note 3 requirements etc. were also discussed.
e) Qualified Institutional Placements (“QIP”): The benefits of permitting QIP
issuances of listed Indian companies on the stock exchanges in IFSC were
presented.
The third meeting of the Working Group was held on September 25, 2023 and the
following issues were discussed:
a) Operationalizing Direct Listing:
Two approaches were discussed in the meeting:
i. IFSC Depository opening a nominee account with Indian
Depositories for facilitating listing and trading of Indian companies
(unlisted and listed) on IFSC exchanges. In this regard, it was
acknowledged that while such nominee/ omnibus account
structures are prevalent in many other global and advanced markets,
the demat accounts in India are based on segregated account
structure. Therefore, it was agreed that the proposed model may
require changes in Depositories Act, 1996 and/or Rules and
Regulations made thereunder.
ii. The mechanism similar to ADRs/ GDRs may be considered wherein
the shares earmarked for listing on IFSC exchanges may be held by
the custodians in India and the equivalent number of shares may be
issued and listed on IFSC Exchanges.
It was agreed that both these approaches may be compared with the
current DR framework, operationally and legally. The differences between
the two approaches may be identified and addressed to propose seamless
operationalization of direct listing in IFSC.
25Direct Listing of Listed Indian Companies on IFSC Exchanges
b) Minimum Public Shareholding
It was discussed that the minimum public shareholding requirements may
be treated similar to DR framework. In this regard, it was mentioned that
IFSCA may consider having adequate minimum float for the companies to
continue listing on IFSC exchanges.
c) Surveillance and Enforcement
It was mentioned that both the regulators namely SEBI and IFSCA need to
coordinate closely on surveillance and enforcement related matters in
respect of Indian listed companies having listing in both jurisdictions.
d) QIPs
It was suggested that QIPs of Indian companies may be permitted on IFSC
exchanges, through abridged prospectus.
The fourth meeting of the Working Group was held on October 23, 2023 for
discussion on the draft report. It was decided that a sub-group would be formed to identify
all changes required at systemic level as well as operational level by conducting a study
through a "use-case analysis" wherein a complete life cycle of a hypothetical Indian listed
entity may be carried out (such as issuance at IFSC Exchanges, Open Offer, Preferential
Issuance, Public Issuance (FPO), Rights Issue, Corporate Actions, Scheme of arrangement,
disclosures, Surveillance Actions, Delisting etc.). Subsequently, several meetings were held
by the sub-group to make recommendations on the various operational and regulatory
issues involved in this regard. The detailed analysis of this sub-group is placed at
Annexure-1.
The fifth meeting of the Working Group was held on December 12, 2023. The
members of the Working Group agreed with the recommendations made in the report, with
additional suggestions on the draft report particularly with regard to including the option
of operationalizing direct listing through the international central securities depositories
(ICSDs).
26Direct Listing of Listed Indian Companies on IFSC Exchanges
CHAPTER III: GLOBAL BEST PRACTICES
The world is more inter-connected than ever before and capital markets are no
exception, as companies regularly look beyond their own borders/ jurisdictions for capital
raising opportunities. Companies can access the global capital markets in a variety of ways,
including cross-border listings, domestic listings with international placements, and
private placements. Cross-border listings allow companies to raise capital on a foreign
stock exchange, reaching a wider pool of investors and potentially gaining greater visibility.
Companies have a growing number of options to choose from, when considering
stock exchanges and jurisdictions for capital raising. Here are some key factors to consider6:
a) Listing requirements: Most exchanges have listing requirements, such as financial
track record, assets, minimum number of shareholders, public float, minimum share
price, and capitalization. Some exchanges may be easier to qualify for than others,
depending on the company's stage of development. For example, a company in the
research and development phase may be more likely to meet the requirements of an
exchange that offers assets test financial requirements rather than requiring a track
record of profitability.
b) Capital required: Some exchanges are better suited for large capital raisings due to
their size and liquidity, while others may offer a more efficient way to raise smaller
amounts of capital more quickly. Additionally, some exchanges have more flexible
requirements for already-listed companies to raise additional capital, such as
allowing flexibility in structuring and size of placements.
c) Industry peers: Peer companies in the same industry may be more prevalent on
certain exchanges, which can help attract investors and analysts with experience in
the relevant sectors who can provide more accurate valuations. Similarly, investor
appetite for the quality, stage of development, and risks associated with a particular
product may vary from market to market.
d) Visibility: A company with significant presence in a particular jurisdiction may find
it beneficial to establish visibility and brand recognition by listing or raising capital
in that jurisdiction. A company may also seek to increase its overall global
prominence, which could factor into the cross-border capital raising decision.
e) Market participants: Different exchanges may have market participants with
different levels of understanding of the company's business. Investment banks and
other market participants with a deep pool of research analysts and other
investment professionals can help drive successful capital raising and a strong
aftermarket.
f) Timing: Executing a capital raising at the right time in the right market is an
important factor for many companies to consider, especially during times of
6 Reference: Cross-Border Listings Guide by Baker McKenzie, 9th Edition
27Direct Listing of Listed Indian Companies on IFSC Exchanges
significant market volatility. For example, a company whose home jurisdiction is
facing economic and market challenges may be better off listing and/or raising
capital abroad to meet its financial needs at that particular time.
g) Ongoing regulatory requirements: Ongoing exchange or securities regulator
requirements, such as financial and other market disclosure reporting, may be more
stringent on certain exchanges or in certain jurisdictions than others, which can
result in significant compliance costs. It is important for a company to determine
early on whether it will be able to meet all ongoing regulatory obligations for a
chosen exchange.
h) Tax implications: The tax implications of listing on a particular exchange or raising
capital in a particular jurisdiction are also considered.
i) Political and economic stability: The political and economic stability of the
jurisdiction where a company is listed or raises capital can also be a factor to
consider. Companies assess the risks associated with investing in a particular
jurisdiction before making a decision.
The following are some of the prevalent practices for listing and raising capital,
across the globe:
1) USA and Canada
USA and Canada have cross border listing arrangement wherein a Canadian company
can list its shares on a US stock exchange and vice-versa. This allows the companies to
access larger pool of investors and increase their liquidity.
The New York Stock Exchange (NYSE) and NASDAQ are two of the largest stock
exchanges in the world. They are also popular destinations for Canadian companies
seeking to raise capital and expand their reach. The NYSE and NASDAQ have over 1,000
international listings, including ADRs.
As per the available data7, there are 298 Canadian companies listed on both the Toronto
Stock Exchange (TSX) and international exchanges. Of these, 140+ companies are listed
on NYSE and 75+ companies are listed on NASDAQ, making them the top two
international exchanges for Canadian companies.
DTC CDS Link
It is a two-way link between The Depository Trust Company (“DTC”) and CDS Clearing
and Depository Services, Inc. (“CDS”), (depositories in USA and Canada respectively).
CDS, as a participant at DTC, holds securities at DTC, which may be transferred on the
books of DTC on behalf of CDS participants. Conversely, DTC holds securities in its
account at CDS. This enables DTC, on behalf of its participants, to make free deliveries
7 Source: https://www.tsx.com/trading/market-data-and-statistics/market-statistics-and-reports/interlisted-
companies (Data updated as on October 01, 2023)
28Direct Listing of Listed Indian Companies on IFSC Exchanges
and receive eligible securities with other participants of CDS. DTC also maintains links
with other central securities depositories.
2) United Kingdom
London Stock Exchange
LSE has over 300 international issuers listed on its various platforms8 (out of a total of
1881 issuers) representing 109 from North America, 88 from Europe, 52 from Asia, 29
from Australia and the remaining from other parts of the world.
The Alternative Investment Market (“AIM”), a sub-market of LSE for small and medium
size growth companies, also has a fast-track admission procedure for companies that
have had their securities traded on the top tier or main board of a Designated Market for
at least 18 months prior to the date of admission to AIM. This fast-track procedure allows
companies to seek admission to AIM without needing to produce an Admission
Document.
3) European Union Jurisdiction
(a) Euronext International Listings
Euronext is a pan-European stock exchange with presence in seven countries at
Amsterdam (Netherlands), Brussels (Belgium), Dublin (Ireland), Lisbon (Portugal),
Milan (Italy), Oslo (Norway), and Paris (France). It is the leading venue for equity listings
in Europe, and also hosts a significant number of international listings.
There are currently 202 international companies listed on Euronext platforms (out of
1,925 companies), representing approximately 10% of the total number of listed
companies. These companies are from a variety of geographies, including Europe (151),
the Americas (33), Asia Pacific (8), the Middle East and Africa (10).9
(b) Dual Listed Companies
There are 43 dual listed companies on Euronext, meaning that they are also listed on
another stock exchange, typically in their home country. This provides companies with
access to a wider range of investors and capital markets.10
(c) "Fast Path" Procedure
Euronext offers a "Fast Path" procedure to welcome listing of US-listed issuers. This
procedure allows US-listed, non-EU companies to use their existing filings with the US
SEC for a listing on NYSE Euronext's European market. This can significantly reduce the
time and cost of listing on the exchange.
8 https://www.londonstockexchange.com/reports?tab=issuers (As of September 30, 2023)
9 https://www.euronext.com/en/raise-capital/international-listings; Data updated in December 2022
10 https://www.euronext.com/en/raise-capital/international-listings; Data updated in December 2022
29Direct Listing of Listed Indian Companies on IFSC Exchanges
(d) EU Passporting
Euronext also supports passporting, which means that a prospectus approved by an
issuer's home member state is accepted by all other member states. This simplifies the
process of raising capital across multiple European markets.
4) Australia and New Zealand
ASX has over 230 foreign listings (out of ~2000 companies); out of which 62 listings are
from New Zealand; 44 are from USA; 17 are from Canada, 13 are from Singapore; 12 are
from Israel and 12 are from UK11.
ASX New Zealand Foreign Exempt Regime
ASX has a framework for Foreign Exempt Listing under which the issuer must comply
primarily with the rules of its home exchange and is exempt from most of ASX's Listing
Rules.
Australia and New Zealand enjoy a close economic and financial relationship, and this is
reflected in the fact that cross-border listings of securities are common between the two
countries. As per the website of ASX, a total of 15 New Zealand companies have
undertaken a secondary listing on ASX since 2010, under this Foreign Exempt regime.
5) Hong-Kong and Mainland China
Hong Kong ‘A’ Shares and ‘H’ Shares are two types of shares that represent ownership in
Chinese companies.
(a) ‘A’ Share and ‘H’ Share Companies
‘A’ Shares ‘H’ Shares
Incorporation Company incorporated in Mainland China
Mainland China
The Stock Exchange of Hong
Listing (Shanghai/Shenzhen
Kong Limited (HK Exchange)
Stock exchanges)
Currency Traded in CNY Traded in HKD
All investors#
Mostly mainland
Investors (mostly international and
China
institutional)
#Hong Kong market is more international and has more institutional investors. Institutional investors from
Hong Kong and overseas account for about 65 per cent of total turnover12.
11 Source: https://www.asx.com.au/listings/why-list-on-asx/international-companies (Data as of September
30, 2023)
12 https://www.hkex.com.hk/Global/Exchange/FAQ/Getting-Started/Overview-of-the-listed-
market?sc_lang=en#collapse-3
30Direct Listing of Listed Indian Companies on IFSC Exchanges
(b) Red Chip Companies
These companies are enterprises incorporated outside Mainland China and are
controlled by Mainland Chinese Government entities. These are listed on HK Exchange
and traded in HKD.
(c) Mainland Private Enterprises (MPE)
MPEs refer to companies that are incorporated outside Mainland China and are
controlled by Mainland Chinese Individuals. These are listed on HK Exchange and traded
in HKD.
(d) Hong Kong and Mainland Market Highlights
Hong Kong has a total of 2,600+ listed companies with a total market capitalization of
~HKD 31 trillion (~USD 4 trillion)13. These include several ‘H’ Shares companies, Red
chip companies, MPEs and other international listings. (Source: HKEX website)
(e) Secondary Listing
The HK Exchange exempts or waives certain requirements of the Listing Rules for issuers
with, or seeking, a secondary listing. Unlike issuers primary listed on the HK Exchange,
secondary listings are principally regulated by the rules and authorities of the
jurisdiction where they are primary listed.
Further, automatic waivers from full compliance with certain Listing Rules are also
available to secondary listing issuers. Such secondary listing issuers are not required to
apply to the Exchange for these waivers which are granted automatically.
Share Structure
In most developed jurisdictions, such as the USA, UK, EU, Australia, and Canada,
companies are allowed to list the same class of shares on multiple stock exchanges. This means
that investors in different countries can buy and sell shares in the same company, regardless
of which stock exchange the shares are listed on.
Hong Kong on the other hand, maintains a separate class of shares for companies that
are incorporated in mainland China and listed on the HKEX (‘A’ Shares for listing on domestic
stock exchanges and ‘H’ Shares for listing on Hong Kong Exchange).
13 Data available on website of HKEX as on end-November 2023
31Direct Listing of Listed Indian Companies on IFSC Exchanges
CHAPTER IV: DIRECT LISTING - DEPOSITORY CONNECT MODELS
The Working Group deliberated on various options to operationalize Direct Listing of
equity shares of listed Indian Companies on IFSC Exchanges. During the deliberations, the
Working Group discussed at length the possibility to replicate the ADR / GDR mechanism for
Direct Listing, wherein the equity shares earmarked for listing on IFSC exchanges are held by
the custodians in India and the equivalent number of equity shares/securities are issued and
listed on IFSC Exchanges. However, the following are the fundamental issues and challenges
in this option:
a) Under the DR framework, the Depository Receipts (ADR/GDR) are created by the
overseas depository banks14. In this regard, the relevant legal provisions are
summarized as under:
i. ‘Depository Receipt’ under the Depository Receipts Scheme, 2014 -
2(1.)(a) ‘depository receipt’ means a foreign currency denominated
instrument, whether listed on an international exchange or not, issued by a
foreign depository in a permissible jurisdiction on the back of permissible
securities issued or transferred to that foreign depository and deposited with
a domestic custodian and includes ‘global depository receipt’ as defined in
section 2(44) of the Companies Act, 2013.
ii. ‘Global Depository Receipts’ under the Companies Act, 2013-
2(44): “Global Depository Receipt” means any instrument in the form of a
depository receipt, by whatever name called, created by a foreign
depository outside India and authorised by a company making an issue of
such depository receipts”.
iii. The Companies (Issue of Global Depository Receipts) Rules, 2014
Rule 4(3) states that – “The depository receipts shall be issued by an overseas
depository bank appointed by the company and the underlying shares shall
be kept in the custody of a domestic custodian bank.”
Rule 5 (3) provides the manner and form of DRs - “The underlying shares
shall be allotted in the name of the overseas depository bank and against such
shares, the depository receipts shall be issued by the overseas depository
bank.”
b) Thus, the Working Group noted that whereas the DR scheme is based on issuance
of new securities by another intermediary deriving its value from underlying
securities, which can also be equity shares of a company. However, as per
14 Also referred as “foreign depository” under some laws.
32Direct Listing of Listed Indian Companies on IFSC Exchanges
Companies Act, 2013, the equity shares are always issued directly by the company
and cannot be issued by any other entity. Further, unlike DR instrument, equity
shares are not backed by (or derive value from) any other underlying securities.
c) The Working Group also noted that the proposed scheme and rules to be notified
by the Government of India only envisages direct listing of equity shares at IFSC
exchanges. This is fundamentally different from a Depository Receipt, as in the case
of listing of ‘equity shares’; there would not be any ‘underlying’ which is sine-quo-
non in the case of Depository Receipts.
Therefore, the Working Group concluded that the exact replication of the DR scheme
may not be possible in the case of direct listing of equity shares of Indian companies on IFSC
exchanges.
The Working Group however recognizes that the regulatory aspects of direct listing of
shares by Indian companies may be very similar to Depository Receipts so far as various
compliances are concerned, as the objective of both the instruments (“Direct Listing of equity
shares” and “DRs”) are similar i.e. raising foreign capital by Indian companies through
issuance of securities outside of domestic India.
Therefore, in order to enable seamless and quick implementation of the announcement
made by the Hon’ble Finance Minister of India enabling direct listing of equity shares on IFSC
exchanges, the working group recommends the following models:
MODEL 1
1) Direct Depository Connect
The equity shares of Indian companies listed on IFSC exchanges shall be held directly
by the shareholders in their demat accounts maintained with Depository in IFSC. The
Depository in IFSC shall maintain the register for the shares listed in IFSC as required
under section 88 of the Companies Act, 2013, read with section 11 of the Depositories Act,
1996.
In the case of fresh issuance, the equity shares shall be issued by a company, directly in
the IFSC depository.
In the case of offer for sale, the shares will be transferred from the entities’ demat
account in domestic India to the shareholders’ demat account in IFSC.
An agreement will be required to be entered by the company listed in India, with the
Depository in IFSC, Indian depositories and the Registrar and Share Transfer Agent of the
company, for admission of the equity shares of the company into the system of IFSC
Depository.
The transfer of securities from Indian depositories to IFSC depositories will be
required to be permitted legally through suitable regulatory framework, as the extant
33Direct Listing of Listed Indian Companies on IFSC Exchanges
regulations do not envisage inter-jurisdiction transfer of Indian securities. SEBI and IFSCA
may specify the required legal enablers in this regard.
As per the Guidelines of The Association of National Numbering Agencies (ANNA
Guidelines), there is no requirement of separate International Securities Identification
Number (ISIN) in case of pari-passu equity shares of the same class. ANNA Guidelines
permit same ISIN to be traded on the exchanges in multiple jurisdictions in different
currencies. Therefore, the ISIN in the Indian jurisdiction will work in IFSC as well.
The scenarios in cases of Fresh Issue and Offer for sale are explained as under.
a) Fresh issuance by the Company
In case of issuance of equity shares by the listed Indian companies in IFSC, the new
equity shares shall be issued directly in the demat accounts of the shareholders
maintained with the IFSC Depository.
For example, if a company X, having 100 lakh equity shares issued and listed on
Indian exchanges, is desirous of issuing 20 lakh additional equity shares in IFSC,
the newly issued 20 lakh shares shall be issued directly to the shareholders in their
demat accounts maintained with the IFSC Depository.
A pictorial presentation of the model 1(a) is depicted below15:
b) Offer for Sale by the existing shareholders
In case of an offer for sale by existing shareholders of the Indian listed companies, the
equity shares offered for the purpose of listing and trading on IFSC exchanges will be
purchased by new shareholders in IFSC. Accordingly, the depositories (Indian as well
15 ABC has been used as an illustration for a promoter / large investor in the company. This has been used for
illustration in the case of OFS in the diagram at Model 1(B) as well
34Direct Listing of Listed Indian Companies on IFSC Exchanges
as IFSC Depository) shall have the necessary linkage to enable transfer of shares from
the shareholders in Indian depositories to the shareholders in the IFSC depository. The
Indian companies may come out with a public issue for sale of shares by existing
shareholders. The filing and process of listing on IFSC exchanges will be carried out by
the company in similar manner as compared to raising of capital.
For example, if a company X, having 100 lakh equity shares issued and listed on Indian
exchanges and a shareholder ‘ABC’ is desirous to offer 20 lakh equity shares in IFSC, in
such case, ABC shall sell its shareholding through investment banker/ stock exchange
in IFSC. The shares of ABC shall be transferred from its demat account with Indian
depository to IFSC Depository through Depository Connect which in turn, will allocate
to the respective shareholder’s demat account in IFSC.
A pictorial presentation of the model 1(b) is depicted below:
Reconciliation
Since the equity shares of the Indian companies will be listed in both jurisdictions,
there is a need to reconcile the list of shareholders of the company across both the
jurisdictions. Currently, the depositories in India (NSDL and CDSL) share the Beneficiary
Position (BenPos) statements to the RTA for reconciliation of shareholders in the domestic
India. In similar manner, the IFSC depository shall send information about the shareholders
(BenPos statements) to the RTA of the company on the same periodicity as the Indian
Depositories. This would ensure that the non-resident investors in IFSC are identified by
the company and the RTA, for the purpose of various corporate actions and compliances.
Compliances under Companies Act, 2013
Considering pari-passu nature of equity shares, the compliances under Companies Act,
35Direct Listing of Listed Indian Companies on IFSC Exchanges
2013 shall be on ‘combined basis’16 on various matters (total issued share capital,
shareholding pattern, balance sheet, voting etc.).
Corporate Actions
Since the equity shares in India and the IFSC are pari-passu, all the corporate actions
by the issuer company shall be provided to the shareholders in India and IFSC
simultaneously.
MODEL 2
2) Nominee Account Structure
Nominee Account
A nominee account is a brokerage or custodian account where assets (stock, bonds etc.)
are held in the name of a nominee or a third party (often a broker or financial institution)
acting as the registered owner on behalf of underlying beneficial owners. Beneficial
owners retain ownership rights (economic ownership) while nominee holds legal
ownership. This is commonly utilised by institutional investors, brokers and financial
institutions dealing with a large volume of transactions and client accounts. This structure
plays a vital role in the efficient functioning of capital markets, facilitating easier
management of securities and assets across numerous clients while balancing efficiency
with regulatory compliance and risk management. This structure is very prevalent in
advanced markets like USA, UK, EU, Singapore, Honk Kong, Canada etc.,)
The ICSDs, such as Euroclear, Clearstream and DTC, operate in nominee account
structure. The ICSDs are central hubs for holding and settling international securities
transactions, as they offer several benefits, including the following:
a) Efficiency: Nominee account structure streamlines settlement at the institution
level and reduces the cost for the clients.
b) Global reach: This structure permits a financial institution to hold assets of multiple
clients under a single aggregated account and thereby providing easy access to a
large pool of international investors.
Further, over the years, Indian issuers have increasingly tapped into international
capital markets by issuing foreign currency bonds and masala bonds (rupee-denominated
bonds), as they offer access to wider pool of international investors and help in
diversifying funding sources. These bonds are often settled and held in the ICSDs.
In view of the above, following sub-models are recommended:
16 ‘combined basis’ shall include the shares listed on Indian stock exchanges, plus the shares listed on IFSC
exchanges
36Direct Listing of Listed Indian Companies on IFSC Exchanges
Model 2(A)
Nominee Account by IFSC Depository
In this model, the IFSC Depository, which is an international depository, shall open a
nominee account with Indian Depositories for facilitating listing and trading of shares of
Indian companies (unlisted and listed) on IFSC exchanges.
The following are the challenges in this option:
a) Nominee/omnibus account structure has not been permitted for holding securities
in India (domestic India and IFSC) under Depositories Act, 1996 and Regulations
issued by SEBI and IFSCA.
The Depositories Act, 1996 defines concept of “registered owner” and “beneficial
owner”. The dematerialized securities are held directly in the name of the
“beneficial owners”. The “registered owner” can only be a ‘depository’ whose name
is recorded as such in register of the company.
In terms of the Depositories Act, 1996, the Indian depositories can open demat
accounts only in the name of the “beneficial owners” (BO accounts). Thus, in this
case, the nominee account opened by IFSC depository shall be like the regular BO
account with Indian depositories, which would imply that the IFSC depository
becomes the BO in terms of Depositories Act, which is not the case.
b) In terms of regulation 59 of the SEBI (Depositories and Participants) Regulations,
2018 (DP Regulations), separate segregated accounts of the beneficial owners are
required to be maintained in domestic India, as mentioned below:
“Separate accounts
59. (1) Separate accounts shall be opened by every participant in the name of
each of the beneficial owners and the securities of each beneficial owner shall be
segregated, and shall not be mixed up with the securities of other beneficial
owners or with the participant’s own securities.
(2) A participant shall register the transfer of securities to or from a beneficial
owner’s account only on receipt of instructions from the beneficial owner and
thereafter confirm the same to the beneficial owner in a manner as specified by
the depository in its bye-laws.
(3) Every entry in the beneficial owner’s account shall be supported by electronic
instructions or any other mode of instruction received from the beneficial owner
in accordance with the agreement with the beneficial owner.”
c) Further, in terms of regulation 25(3) of the IFSCA (Capital Market Intermediaries)
Regulations, 2023, separate segregated accounts are required to be maintained in
the name of each beneficial owner in IFSC, as mentioned below:
37Direct Listing of Listed Indian Companies on IFSC Exchanges
“25 (3) Separate accounts shall be opened by every depository participant in the
name of each of the beneficial owners and the securities of each beneficial owner
shall be segregated and shall not be mixed up with the securities of other
beneficial owners or with the participant’s own securities.”
d) The Depositories Act, 1996 and the DP Regulations do not provide for a framework
relating to the establishment of such linkage of Indian Depositories with overseas
depositories by way of contractual arrangement.
Role of IFSC Depository: In this model, all the rights and liabilities attached to the
securities shall be upon the IFSC depository on behalf of the beneficial owners i.e., the
holders of securities listed on the IFSC exchanges. In such case, the depository shall be
exercising voting rights on behalf of shareholders, albeit as per their instructions, and
performing other functions including tendering of shares in the open offer, buy-back etc.
Further, it may also be argued that the depository is liable in the first instance for any
liability attached to the securities as a nominee holder, even though such liabilities may be
recovered by the depository subsequently from the beneficial owners. In the extant
framework, the depository is not envisaged to perform such kinds of functions.
In view of the above, it is relevant to mention that while nominee account structure is
prevalent in several jurisdictions, amendments / carve-outs will be required in the
Depositories Act, 1996 and the relevant regulations notified by SEBI and IFSCA to permit
opening of a nominee account by IFSC depository with the Indian depositories to facilitate
direct listing of Indian companies on IFSC Exchanges, with necessary safeguards, including
ring-fencing the core operations and functioning of the IFSC depository.
Model 2(B)
Issuance on ICSDs
The foreign securities issued by Indian issuers, including foreign currency bonds,
masala bonds, ADRs/ GDRs are already been held in the form of nominee accounts with
the ICSDs. In the context of IFSC, the debt securities listed on the IFSC exchanges are
already permitted to be held with the ICSDs in the nominee account structure. Further, the
GIFT NIFTY Connect has also been enabled through the nominee account structure.
Further, the clearing corporations in the IFSC have already established connectivity
with some ICSDs for clearing and settlement of securities traded on the IFSC exchanges.
Considering that the shift of IFSC Depository towards nominee account structure
requires several amendments, the Working Group is of the view that the Direct Listing may
be permitted through issuance on the globally recognised ICSDs.
Since the Indian depositories (NSDL and CDSL) are not currently permitted to directly
connect with the ICSDs, in this model, the equity shares listed at IFSC exchanges will be
required to be transferred and held directly by the ICSDs.
38Direct Listing of Listed Indian Companies on IFSC Exchanges
Additionally, in this model, the equity shares will be held by the ICSDs outside of IFSC,
which may not add to the development of the capital market ecosystem in IFSC. Further,
the ICSDs will be required to comply with the requisite information sharing arrangements
with the Indian depositories for regulatory compliances (including monitoring of foreign
limits) as mentioned in this report.
Suggestions for implementation of the above models
While either of the above models can be opted for operationalizing the direct listing of
equity shares of listed Indian companies on IFSC exchanges, the Working Group suggests the
following approach regarding implementation of the proposed Direct Listing:
IFSC Depository
i. The Working Group is of the view that Model 1 (Direct Depository Connect) may be the
preferred model in short term for implementing the proposed Direct Listing of listed
Indian Companies on the stock exchanges in IFSC, through the depository in IFSC, and
using the existing “segregated” account structure.
ii. The Working Group also recommends that the proposed Model 2(A) i.e. “nominee” account
structure may be permitted in IFSC for reducing cost and time for onboarding of clients,
bringing in more efficiency in secondary market transactions and other benefits
associated with this structure. This will be in line with the objective of promoting ease of
doing business and aligning with the best practices in other international financial centres.
However, the proposed Model 2(A) requires shifting of IFSC depository from segregated
structure to nominee structure and requires amendments in various legal provisions.
Therefore, this can be implemented only in medium to long term.
Issuance through ICSDs
iii. While the preference would be to implement direct listing through the depository in IFSC
(mentioned above), the proposed Model 2(B) can also be considered in the short term. As
the non-resident investors already maintain accounts with the ICSDs and are familiar with
the functioning of these depositories, this model may provide a quick solution to shifting
to “nominee” account structure in IFSC in the short term. However, there are challenges in
this model as mentioned above.
39Direct Listing of Listed Indian Companies on IFSC Exchanges
CHAPTER V: REGULATORY AND OPERATIONAL ISSUES
The Working Group deliberated on the regulatory and operational matters involved in
direct listing covering various scenarios of capital raising activities, corporate actions,
corporate restructuring, takeovers, buy-backs and delisting. A sub-group was formed in this
regard. The detailed study conducted by this sub-group is placed at Annexure-1. The
recommendations of the Working Group are mentioned in this Chapter.
FURTHER PUBLIC OFFER
The listed Indian Companies may raise additional capital through further public offers
(FPOs)17 for meeting their capital requirements. The FPOs of equity shares of listed Indian
companies on IFSC exchanges may be possible under the following scenarios:
a) First time listing on IFSC Exchange
b) Post listing in IFSC, offer of shares
a. solely in IFSC/India18
b. simultaneous offers in both jurisdictions
The Indian companies can make FPOs in accordance with the provisions of Companies
Act, 2013 and the requirements specified by regulators. In terms of the extant regulatory
provisions, FPOs of listed Indian companies are currently governed by Chapter IV of the SEBI
(Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations)
and the FPOs by companies listed on IFSC exchanges are governed by Part B of Chapter III of
IFSCA ILS Regulations.
The issue of new equity shares of a listed Indian company for the purpose of listing on
IFSC exchanges will be akin to a further public offer by the company. The Indian companies
are permitted to make FPOs in India subject to meeting the eligibility criteria and conditions
mentioned in the SEBI ICDR Regulations. In order to avoid any regulatory arbitrage in this
regard, the companies that are not meeting the eligibility criteria and conditions for issue of
FPOs in domestic India may not be permitted to issue equity shares in IFSC. Therefore, while
issue of equity shares in IFSC shall be primarily governed by the IFSCA ILS Regulations, the
listed Indian companies may be permitted to make public offer in IFSC only subject to
compliance with the requirements provided under regulations 102 (Entities not eligible to
make a further public offer), 103 (Eligibility requirements for further public offer) and 105
(Additional conditions for an offer for sale) of the SEBI ICDR Regulations.
Based on a detailed comparison of the regulatory frameworks in both jurisdictions, it
is noted that provisions for some activities have not been specified in the IFSCA ILS
17 FPOs may also include OFS
18 The SEBI ICDR Regulations may be amended to allow offers to be issued solely on IFSC exchanges.
40Direct Listing of Listed Indian Companies on IFSC Exchanges
Regulations such as detailed guidance on submission of due-diligence certificate, anchor
investors etc. Accordingly, it is suggested that IFSCA may consider specifying the framework
for the aforesaid.
The dually listed companies may subsequently make a further public offer either solely
in IFSC, solely in India or simultaneously in both the jurisdictions19.
1) Offer solely in IFSC/India
The following approach may be considered for offers solely in one jurisdiction:
a) Where a company proposes to make an FPO in a particular jurisdiction (regulated
by SEBI/IFSCA), it shall comply with the processes and other regulatory
requirements of the said jurisdiction.
b) The issuer will be required to file an application seeking in-principle approval of
the recognised stock exchange(s) where the equity shares are proposed to be listed.
Such stock exchange shall seek NOC of all the recognised stock exchanges in both
jurisdictions where the company is listed, prior to granting in-principle approval.
The recognised stock exchanges in both jurisdictions may specify the process20 in
this regard.
c) The minimum promoters’ contribution may not be mandated for FPOs made solely
on the recognised stock exchanges in IFSC.
2) Simultaneous Offers in both jurisdictions
In case of simultaneous offers, type of investors, basis of allocation, offer process etc.
will be different for both the jurisdictions. Therefore, it is suggested that the offer size may
be separate for both markets and be pre-decided by the issuer. The listed company shall
disclose the same at all relevant documents relating to the FPO.
Since the companies are primarily listed on Indian exchanges, IFSCA may rely upon the
regulations of SEBI for simultaneous FPOs in both jurisdictions. Accordingly, it is
recommended that IFSCA may issue guidelines / regulations / circular specifying that
Chapter IV of SEBI ICDR Regulations shall mutatis mutandis apply, unless specified
otherwise, for simultaneous further public offer of equity shares by companies dually
listed in both jurisdictions, except the following:
a) Process relating to listing of equity shares on the recognised stock exchanges in
IFSC shall be governed by the regulatory requirements specified by IFSCA.
19 The equity shares will be held in the depositories in the same manner (model) permitted for first listing in
IFSC
20 The process may be specified by way of circular or guideline or SOP
41Direct Listing of Listed Indian Companies on IFSC Exchanges
b) Offer related activities (application, basis of allotment, participation of anchor
investor etc.) in IFSC shall be separate and governed as per regulatory
requirements specified by IFSCA.
c) A copy of various documents shall be filed with IFSCA and also with the recognised
stock exchanges in IFSC.
d) No separate advertisement in newspapers may be mandated for the investors in
IFSC.
e) As regards minimum promoters’ contribution, the calculation shall be on combined
basis and the lock-in shall be in India.
In order to promote ease of doing business and facilitate simultaneous offers/listing,
the issuer may be permitted to file a common offer document containing details of offers made
in both jurisdictions. The issuer may be permitted to appoint SEBI registered merchant
bankers for the simultaneous offers made in both jurisdictions. To begin with, IFSCA may
initially permit filing of offer documents by SEBI registered merchant bankers, in such cases.
Further, the issuer will be required to file applications for seeking in-principle approval
with recognised stock exchanges in both jurisdictions. The date of listing shall also be same in
both jurisdictions.
PREFERENTIAL ISSUE
The Indian companies can issue equity shares on preferential basis in accordance with
the provisions of Companies Act, 2013 and requirements specified by the regulators. In terms
of the extant regulatory provisions, preferential issues by listed Indian companies are
currently governed by Chapter V of the SEBI ICDR Regulations. As regards IFSC, in terms of
Regulation 94 of IFSCA ILS Regulations, a company listed on IFSC stock exchange may issue
preferential issues of equity shares, subject to compliance with the requirements that may be
specified by the IFSC stock exchanges and IFSCA from time to time. The detailed regulatory
norms for preferential issue by listed companies on IFSC Exchanges are however yet to be
specified.
In the context of Direct Listing, since the companies are primarily listed on Indian
exchanges, the provisions of SEBI ICDR Regulations should be made applicable for preferential
issues by companies dually listed in both jurisdictions. Accordingly, it is recommended that
IFSCA may issue guidelines / regulations / circular specifying that Chapter V of SEBI ICDR
Regulations shall mutatis mutandis apply, unless specified otherwise, for preferential issue of
equity shares by companies dually listed in both jurisdictions, except to the extent of process
involved with respect to listing of equity shares on the recognised stock exchanges in IFSC.
In respect of dually listed companies, the company will have the option to list the equity
shares allotted in a preferential issue on the recognised stock exchanges in India, IFSC or both
jurisdictions. The company shall ensure that disclosures in this regard are made at all stages
42Direct Listing of Listed Indian Companies on IFSC Exchanges
of the preferential issue starting from Board approval. The necessary amendment may be
required in Regulation 160 of SEBI ICDR Regulations in this regard.
If the company proposes to list the equity shares in IFSC, the issuer will be required to
file an application seeking in-principle approval of the recognised stock exchange(s) in IFSC
where the equity shares are proposed to be listed. As mentioned above, the stock exchange in
IFSC shall seek NOC of all the recognised stock exchanges in India where the company is listed,
prior to granting in-principle approval, and vice versa.
Further, in case of simultaneous preferential issue of equity shares in both
jurisdictions, the date of listing shall be same in both jurisdictions.
Pricing
With respect to pricing, is if suggested that while calculating the “volume weighted
average price” and “frequently traded shares” for determining the Preferential Issue price
provided under Part IV of Chapter V of SEBI ICDR Regulations, the trading on the recognised
stock exchanges in IFSC may also be considered. A proviso / explanation in this regard may be
inserted in Part IV of Chapter V of SEBI ICDR Regulations.
RIGHTS ISSUE
The Indian companies can issue equity shares by way of rights issue in accordance with
the provisions of Companies Act, 2013 and requirements specified by the regulators.
Considering pari-passu equity shares listed and traded on IFSC exchanges, the shareholders
in IFSC will be eligible for participation in the rights issue by the listed companies.
The regulatory requirements for rights issue by listed Indian companies have been
specified in Chapter III of the SEBI ICDR Regulations. As regards IFSC, in terms of Regulation
94 of IFSCA ILS Regulations, a company listed on the IFSC stock exchange may issue Rights
issues of equity shares, subject to compliance with the requirements that may be specified by
the IFSC stock exchanges and the International Financial Services Centres Authority from time
to time. The detailed regulatory norms for rights issue by listed companies on IFSC Exchanges
are however yet to be specified.
Since the companies are primarily listed on Indian exchanges, the provisions of SEBI
ICDR Regulations should be made applicable for rights issues by companies listed in both
jurisdictions. Accordingly, it is recommended that IFSCA may issue guidelines / regulations /
circular specifying that Chapter III of SEBI ICDR Regulations shall mutatis mutandis apply,
unless specified otherwise, for Rights issue of equity shares by companies dually listed in both
jurisdictions, except the following:
a) Process relating to listing of equity shares on the recognised stock exchanges in
IFSC shall be governed by the regulatory requirements specified by IFSCA.
b) The filing of documents may be made to IFSC exchanges as well (in addition to
Indian exchanges).
43Direct Listing of Listed Indian Companies on IFSC Exchanges
c) A copy of the LOF may be filed with IFSCA as well for information.
d) The trading of Rights Entitlements in IFSC shall be separate in accordance with the
regulatory requirements specified by IFSCA.21
e) No separate advertisements in newspapers may be mandated for the investors in
IFSC.
Offer Document
Since this is a simultaneous activity in both jurisdictions, it is recommended that a
common Offer document may be prepared in accordance with the format specified in the SEBI
ICDR Regulations containing details of offer made in both jurisdictions. As mentioned above,
the issuer may be permitted to appoint SEBI registered merchant bankers for the
simultaneous offers made in both jurisdictions. To begin with, IFSCA may permit filing of offer
documents by SEBI registered merchant bankers, in such cases.
In-Principle Approval
The issuer will be required to file application for seeking in-principle approval with
recognised stock exchanges in both jurisdictions. The rights issue may be permitted only after
receipt of in-principle approvals from all the stock exchanges where the company is listed.
Pricing
It is suggested that the pricing of the rights issue shall be same in both jurisdictions so
as to ensure fairness to shareholders in both jurisdictions. The exchange rate as on the ‘Record
Date’ may be taken as the reference rate for converting INR into foreign currency.
Process
As mentioned above, the investors in IFSC will also be entitled to participate in the
Rights Issue. In this regard, the following process is recommended:
a) Since the companies are primarily listed on Indian exchanges, the recognised stock
exchanges in India shall be the primary designated stock exchanges for rights issue
process.
b) A recognised stock exchange in IFSC shall be the secondary designated exchange
for the investors in IFSC.
21 In proposed model 1 (Direct Depository connect), the credit of rights entitlements (REs) will be directly in
the demat accounts of the shareholders in IFSC held with IFSC depository, whereas in proposed model 2
(Nominee Account Structure), the REs will be credited in the demat account of IFSC depository as a nominee on
behalf of the shareholders in IFSC.
44Direct Listing of Listed Indian Companies on IFSC Exchanges
c) The designated exchange in IFSC shall provide information regarding application
to the primary designated stock exchange in India enabling participation of non-
resident investors in the Rights Issue.22
The recognised stock exchanges in India and IFSC may specify guidelines / circular /
SOP in this regard.
Fast Track Rights Issue
In respect of eligibility criteria for fast track rights issue provided under Regulation 99
(h) and (i) of SEBI ICDR Regulations, it is suggested that the issuer may be made eligible for
rights issue through fast track route only if there is no corresponding action by IFSCA (similar
to SEBI).
DIVIDEND
Considering that pari-passu equity shares are listed and traded on IFSC exchanges, the
shareholders in IFSC shall be eligible to receive dividends. As regards process for payment of
dividends, in case of proposed Model 1 (Direct Depository connect) the payment of dividend
shall be made directly by the issuer to the shareholders in IFSC; whereas in Model 2 (Nominee
Account) the payment can be made either directly by the issuer to the shareholders or through
the Depository (similar to DRs)23.
BONUS ISSUE
The regulatory requirements in respect of listed companies have been specified under
Chapter XI of SEBI ICDR Regulations. Considering pari-passu equity shares listed and traded
on IFSC exchanges, the shareholders in IFSC shall be eligible for all the corporate
actions/benefits by the listed companies. Accordingly, the bonus shares by the listed
companies will be required to be made available to the equity shareholders in IFSC.
Since the companies are primarily listed on Indian exchanges, the eligibility criteria
provided under SEBI ICDR Regulations may be made applicable for bonus issuances in IFSC
also. It is therefore recommended that IFSCA may issue guidelines / regulations / circular
specifying that Chapter XI of SEBI ICDR Regulations shall mutatis mutandis apply, unless
specified otherwise, for bonus issue of equity shares in respect of companies listed in both
jurisdictions.
22 In case of model 2 (nominee account), the IFSC depository shall participate in the Rights Issue in India on
behalf of the shareholders in IFSC
23 In the case of DRs, cash dividends on equity shares represented by DRs are paid to the overseas depositary
bank in Indian rupees and are generally converted by the overseas depositary into the relevant foreign currency
and distributed, net of depositary fees, taxes, if any, and expenses, to the DR holders.
45Direct Listing of Listed Indian Companies on IFSC Exchanges
MINIMUM PUBLIC SHAREHOLDING
The regulatory requirements on maintaining minimum public shareholding in the
listed Indian companies have been specified in Rule 19(2)(b) of the Securities Contracts
(Regulation) Rules, 1957 (“SCR Rules”), mentioned below:
“The minimum offer and allotment to public in terms of an offer document shall be-
i) at least twenty five per cent of each class or kind of equity shares or debenture
convertible into equity shares issued by the company, if the post issue capital of the
company calculated at offer price is less than or equal to one thousand six hundred crore
rupees;
(ii) at least such percentage of each class or kind of equity shares or debentures
convertible into equity shares issued by the company equivalent to the value of four
hundred crore rupees, if the post issue capital of the company calculated at offer price is
more than one thousand six hundred crore rupees but less than or equal to four thousand
crore rupees;
(iii) at least ten per cent of each class or kind of equity shares or debentures convertible
into equity shares issued by the company, if the post issue capital of the company
calculated at offer price is above four thousand crore rupees but less than or equal to one
lakh crore rupees:
(iv) at least such percentage of each class or kind of equity shares or debentures
convertible into equity shares issued by the company equivalent to the value of five
thousand crore rupees and at least five per cent of each such class or kind of equity shares
or debenture convertible into equity shares issued by the company, if the post issue capital
of the company calculated at offer price is above one lakh crore rupees:
Provided that the company referred to in this sub-clause (iv) shall increase its public
shareholding to at least ten per cent within a period of two years and at least twenty-five
per cent. within a period of five years, from the date of listing of the securities, in the
manner specified by the Securities and Exchange Board of India;
Provided that the company referred to in sub-clause (ii) or sub-clause (iii), shall increase
its public shareholding to at least twenty five per cent within a period of three years from
the date of listing of the securities, in the manner specified by the Securities and Exchange
Board of India:
…”
Further, the definition of “public shareholding” has been provided under Rule 2(e) of
the SCR Rules as follows:
“public shareholding” means equity shares of the company held by public including shares
underlying the depository receipts if the holder of such depository receipts has the right
46Direct Listing of Listed Indian Companies on IFSC Exchanges
to issue voting instruction and such depository receipts are listed on an international
exchange in accordance with the Depository Receipts Scheme, 2014:
Provided that the equity shares of the company held by the trust set up for implementing
employee benefit schemes under the regulations framed by the Securities and Exchange
Board of India shall be excluded from public shareholding.”
Therefore, in terms of the extant provisions of SCR Rules, the equity shares held by
public in the IFSC will also be considered as part of the overall public shareholding and the
MPS compliance will be on ‘combined basis’. However, this approach may lead to a situation
wherein there is less free float in a jurisdiction and the purpose of MPS requirement may be
defeated. For example, suppose a company is having total 1,00,000 shares out of which 70,000
shares are listed on Indian exchanges, and 30,000 on IFSC exchanges. Out of the total shares
listed on IFSC exchanges (30,000), 25,000 are held by the public shareholders. Thus, the
company becomes MPS compliant since 25 % of its total share capital is held by the public. In
this scenario, even if all the 70,000 shares of the company on Indian exchanges is held by the
promoters, the company shall be considered as MPS compliant.
Thus, it would be in the interest of both jurisdictions that the MPS requirement ought
to be on a “jurisdiction” basis and not on a “combined” basis. Therefore, it is recommended
that a company listed in both the jurisdictions may be required to comply with MPS
requirement separately in both jurisdictions so as to ensure free float of equity shares in both
markets. In this regard, the amendments in SCR Rules may be made by Government of India
(DEA) in consultation with SEBI and IFSCA.
TAKEOVERS
SEBI has specified detailed requirements for substantial acquisition of shares and
takeovers of companies listed on Indian exchanges. The definition of “shares” has been
provided in regulation 2(1)(v) of SEBI (SAST) Regulations, 2011, as follows:
“shares” means shares in the equity share capital of a target company carrying voting
rights, and includes any security which entitles the holder thereof to exercise voting rights;
Explanation.-For the purpose of this clause shares will include all depository receipts
carrying an entitlement to exercise voting rights in the target company.”
As mentioned above, in the case of DRs, the shares are considered only if the DR holders
are entitled to exercise voting rights. The applicability of SEBI SAST Regulations is therefore
linked with voting rights. As regards Direct Listing, the equity shares are pari-passu and will
always have same voting rights. Therefore, SEBI SAST Regulations will apply on a ‘combined
basis’ in respect of dual listed companies.
Applicability of Regulations
Since the companies are primarily listed on Indian exchanges, the Working Group is of
the view that the provisions of SEBI SAST Regulations should be made applicable for takeovers
of companies dually listed in both jurisdictions. Accordingly, it is recommended that IFSCA
47Direct Listing of Listed Indian Companies on IFSC Exchanges
may issue guidelines / regulations / circular specifying that SEBI SAST Regulations shall
mutatis mutandis apply, unless specified otherwise, for takeovers and open offers of
companies dually listed in both jurisdictions, subject to filing a copy of the documents24 (PA,
DPS, DLOF, LOF etc.) to IFSCA and the stock exchanges in IFSC; and no separate mandatory
requirement for newspaper advertisement for investors in IFSC.
Open Offers
The purpose of open offer is to provide an opportunity to the existing public
shareholders to either continue with the new ownership structure pursuant to change in
control / takeovers etc. or make an exit by selling their shares at a fair price. This process is
designed to ensure fairness and protecting the interests of minority shareholders of the listed
companies. It is therefore recommended that, in case of trigger, the acquirer may be required
to extend the open offer to public shareholders in both jurisdictions.
Process
Since the companies are primarily listed on Indian stock exchanges, it is suggested that
all open offers shall be made in India as the primary jurisdiction and enable participation of
investors in IFSC through the following mechanism:
a) A recognised stock exchange in India shall be the primary designated stock
exchanges for tendering in Open Offers.
b) A recognised stock exchange in IFSC shall be the secondary designated exchange
for facilitating tendering in the open offers by investors in IFSC.
c) The designated exchange in IFSC will provide information regarding tendering to
the primary designated stock exchange in India.25
d) A depository account may be opened in IFSC as well. The investors in IFSC
participating in the open offer shall transfer the shares to this depository account
in IFSC. Subsequently, the successfully accepted shares in the open offer will be
transferred to the depository account in India.26
e) A separate special escrow account may be opened by the acquirer in IFSC as well to
facilitate payments to investors in IFSC in foreign currency.
Pricing
24 Issuer may be permitted to file common documents
25 In case of model 2 (nominee account), the IFSC depository shall participate in the Open Offers in India on
behalf of the shareholders in IFSC.
26 Depository account and Bank account referred at (d) and (e) respectively required only in proposed model 1
(Direct Depository Connect). As regards Model 2 (Nominee Account Structure), the equity shares are always in
the Indian Depositories.
48Direct Listing of Listed Indian Companies on IFSC Exchanges
The open offer price is an important factor for the shareholders to make decision on
whether to participate in the open offer. It is suggested that the pricing of the open offer may
be same in both jurisdictions so as to ensure fairness to shareholders in both jurisdictions.
The exchange rate as on the ‘Record Date’ may be taken as the reference rate for converting
INR into foreign currency.
It is also suggested that while calculating the “volume-weighted average market price”
and “frequently traded shares” for determining the Open Offer price provided under SEBI
SAST Regulations, the trading on the recognised stock exchanges in IFSC shall also be
considered. The definitions of volume-weighted average market price” and “frequently traded
shares” provided under SEBI SAST Regulations may be amended to include trading on
recognised stock exchanges in IFSC. Alternatively, a proviso / explanation may be inserted in
regulation 8 of SEBI SAST Regulations in this regard.
BUY-BACKS
Buy-backs by Indian listed companies are governed by sections 68-70 of the
Companies Act, 2013 and SEBI Buy-back Regulations.
Buy-back Mechanism
It is recommended that buy-backs may be permitted in IFSC only through the tender
offer route, considering that buy-backs through open market is being phased out completely
by March 31, 2025 in India.
Regulations
Since the companies are primarily listed on Indian exchanges, it is recommended that
the provisions of SEBI Buy-Back Regulations through tender offer route should be made
applicable for buy-backs of companies dually listed in both jurisdictions. Accordingly, it is
recommended that IFSCA may issue guidelines / regulations / circular specifying that SEBI
Buy-Back Regulations shall mutatis mutandis apply, unless specified otherwise, for buy-backs
of companies dually listed in both jurisdictions through tender offer route, subject to filing a
copy of the documents (DLOF, LOF etc.)27 to IFSCA and the stock exchanges in IFSC; and no
separate mandatory requirement for newspaper advertisement for investors in IFSC.
Further, as the equity shares are pari-passu in both jurisdictions, the SEBI Buy-Back
Regulations will apply on a ‘combined basis’ for calculating various thresholds.
Offer Process
The process for participation of shareholders in IFSC in the buy-back offers made by
dual listed Indian companies may be similar to the process suggested in the case of open offers
mentioned above.
27 Issuer may be permitted to file common documents
49Direct Listing of Listed Indian Companies on IFSC Exchanges
Pricing
Similar to open offers, it is suggested that the pricing of the buy-back offers may be
same in both jurisdictions so as to ensure fairness to investors in both jurisdictions. The
exchange rate as on the ‘Record Date’ may be taken as the reference rate for converting INR
into foreign currency.
VOLUNTARY DELISTING
As regards voluntary delisting, the listed companies may choose to delist from either
of the two jurisdictions. Therefore, the voluntary delisting process may be different in both
jurisdictions. This approach will be similar to DRs, wherein delisting of ADRs/GDRs from
international exchanges are separate from delisting of equity shares from Indian exchanges.
Delisting from Indian Exchanges
The voluntary delisting of Indian companies are governed by the provisions of SEBI
(Delisting of Equity Shares) Regulations, 2021, read with SCR Rules. SEBI has recently issued
consultation paper on amendments to SEBI Delisting Regulations, including fixed price as
alternative to Reverse Book Building (RBB). The delisting offer may be made only to investors
in domestic India.
Delisting from IFSC Exchanges
In terms of Regulation 179 of the IFSCA (Issuance and Listing of Securities)
Regulations, 2021, the stock exchanges have been empowered to specify the process for
delisting. The stock exchanges at IFSC will be required to specify the framework for delisting
of equity shares in IFSC.
Simultaneous Delisting from both jurisdictions
A listed company may propose to simultaneously delist from Indian exchanges and also
from IFSC exchanges. In this scenario, the decision by an investor to participate in the delisting
offer is dependent upon the outcome of the delisting exercise in both jurisdictions. Therefore,
it is suggested that if the delisting fails in any of the two jurisdictions, the entire delisting
exercise may be considered as failure.
SCHEME OF ARRANGEMENT
Considering that all the equity shares will be pari-passu, the provisions of the
Companies Act, 2013 shall apply equitably to all shareholders and accordingly, no changes
would be required in the Companies Act, 2013 from a scheme of arrangement perspective. In
respect of dually listed companies, the shareholders will be in both jurisdictions. Therefore,
the NOCs will be required from IFSCA (in addition to SEBI) and IFSC Exchanges (in addition
to Indian exchanges), wherever applicable. IFSCA may be required to come out with detailed
50Direct Listing of Listed Indian Companies on IFSC Exchanges
circular/ guidelines for providing NOCs on Scheme of Arrangements of Indian companies
listed on the recognised stock exchanges in IFSC.
DISCLOSURES
Disclosures by listed companies are of utmost importance in the financial markets and
for various stakeholders. These disclosures provide transparency, accountability, and
necessary information for the investors to make informed decisions. There should be full,
accurate and timely disclosure of financial results, risk and other information which is
material to investors’ decisions.
The listed Indian companies are required to make various disclosures to the recognised
stock exchanges in India under the regulations specified by IFSCA, particularly SEBI LODR
Regulations.
As regards regulatory framework in IFSCA, regulation 153 of IFSCA ILS Regulations
provide following requirements for secondary listed companies on the stock exchanges in
IFSC:
“The issuer with secondary listing of specified securities on a recognised stock exchange(s)
shall comply with the following requirements:
a) maintain the listing of the specified securities on its home exchange and abide by
the listing (or other) rules of such exchange and regulator;
b) release all disclosures in English to the recognised stock exchange(s) at the same
time as they are released to its home exchange or regulator where it has a primary
listing; and
c) comply with such other requirements as may be specified by IFSCA or recognised
stock exchange(s) from time to time.
The same approach may be followed for dually listed Indian companies.
Considering that the listed companies are primarily listed on Indian exchanges with
comprehensive disclosure norms for protecting the interests of minority shareholders, the
dually listed companies may be required to file a copy of all the disclosures made on Indian
stock exchanges, to the stock exchanges in IFSC. In this regard, in order to promote ease of
doing business, the stock exchanges in IFSC and India may consider having necessary
arrangements / agreements to ensure that all the disclosures on the Indian stock exchanges
are also made available on the stock exchanges in IFSC.
MARKET SURVEILLANCE
Market surveillance is an important regulatory function for the stock exchanges and
the regulators. Market surveillance helps ensure integrity of the financial markets. The market
surveillance system helps in detecting and deterring fraudulent activities, market
manipulation, insider trading, and other unethical or illegal practices that could undermine
51Direct Listing of Listed Indian Companies on IFSC Exchanges
investor confidence. Further, effective market surveillance contributes to market stability.
Therefore, there is a need to have adequate mechanisms in place for the regulators / stock
exchanges to conduct market surveillance of trading taking place in both jurisdictions.
The stock exchanges in IFSC will be required to conduct market surveillance of trades
on their stock exchanges. Considering that the Indian companies are primarily listed on Indian
exchanges, it is suggested that the stock exchanges in IFSC shall be required to build necessary
infrastructure in the medium to long term to make the necessary data available to IFSCA and
also to SEBI on need basis.
Unique Identifier in IFSC
The entities trading in both markets (through FPI route in India) will be having
Permanent Account Number (PAN). Therefore, FPIs shall mandatorily provide PAN in IFSC. In
respect of other eligible foreign investors, considering that PAN is not mandatory for the
entities trading in IFSC, there is a need to have adequate mechanisms to ensure that the clients
trading in IFSC are uniquely identified. It is suggested that IFSCA, in consultation with the
stakeholders, shall develop a unique identifier (such as Legal Entity Identifier (LEI) code for
corporate bodies). The exchanges will be required to build the capability to integrate trade
and order log from IFSC with Indian exchanges with the help of these unique identifiers also.
INFORMATION SHARING BETWEEN DEPOSITORIES
The monitoring of foreign investment limit is undertaken by the depository designated
by the issuer. The data is shared by one depository to the designated depository for
monitoring of foreign investment limits and information dissemination. On similar lines, it is
suggested that the depository in IFSC28 shall be required to provide required data of FPI and
NRI clients to the domestic designated depository in agreed format for monitoring of foreign
investment limits by the designated depository. The Indian depositories and the IFSC
depository29 shall have necessary arrangements/ agreements in this regard.
COOPERATION BETWEEN IFSCA AND SEBI
IFSCA and SEBI are signatories to the IOSCO MMoU for sharing of information and
cooperation for the purpose of enforcement and ensuring compliance with laws of respective
jurisdictions. However, additional cooperation, exchange of information and coordination
would be required between IFSCA and SEBI on a regular basis for regulating dually listed
companies. Further, the implementation of direct listing may require further deliberations to
successfully operationalize the proposed models. Therefore, it is desirable to have a bilateral
MoU in place between SEBI and IFSCA in this regard.
REGULATORY ENABLERS FOR DIRECT LISTING
SEBI
28 ICSD in the case of Model 2B
29 ICSD in the case of Model 2B
52Direct Listing of Listed Indian Companies on IFSC Exchanges
The regulatory enablers may be required by SEBI to facilitate Direct Listing of listed
Indian companies on the recognised stock exchanges in IFSC, providing details regarding the
modified applications of various regulations (SEBI ICDR Regulations, SEBI Buy-back
Regulations, SEBI SAST Regulations, SEBI LODR Regulations, SEBI Delisting Regulations etc.),
sharing of information between depositories, minimum public shareholding, market
surveillance etc. as detailed out in the recommendations made in this report. The regulatory
framework may be in the form of a separate Chapter within the SEBI ICDR Regulations or in
the form of circular along with amendments in other respective regulations (similar to
approach followed in the case Depository Receipts).
IFSCA
The regulatory enablers may be required by IFSCA to facilitate direct listing of Indian
companies on the recognised stock exchanges in IFSC as detailed out in the recommendations
made in this report. The regulatory framework may be in the form of amendments in IFSCA
ILS Regulations or in the form of Guidelines / circulars etc.
COMPANIES ACT, 2013
The provisions relating to Direct Listing of equity shares of listed Indian companies on
IFSC Exchanges shall be in accordance with section 23(3) and (4) of Companies Act, 2013 and
the rules notified under this section.
As regards initial listing of the equity shares of listed Indian companies on IFSC
exchanges, the requirements under the applicable provisions of section 62 (further issue of
share capital), section 23 (public offer and private placement), section 28 (Offer of Sale of
Shares by Certain Members of Company) shall continue to apply.
Further, post listing, the applicable provisions of the Companies Act, 2013 shall
continue to apply for further issue of share capital, public offers, private placements, corporate
actions (dividend, issue of bonus shares etc.), buy-backs, voting rights, scheme of
arrangement, etc. for dually listed companies.
Regulatory powers delegated to IFSCA
As regards exercise of regulatory powers provided under Companies Act, 2013 by
IFSCA in IFSC, the Central Government has issued notification dated November 04, 2022
under the provisions of section 31 of IFSCA Act, 2019 empowering IFSCA to administer certain
provisions of the Companies Act which are being administered by SEBI in the domestic India.
In this regard, section 24 of the Companies Act, 2013 has also been modified for IFSC as under:
For section 24, the following section shall be substituted, namely:-
“24. Power of International Financial Services Centres Authority to regulate issue and
transfer of securities, etc.— (1) The provisions contained in this Chapter, Chapter IV and
in section 127 shall, -
a. in so far as they relate to -
53Direct Listing of Listed Indian Companies on IFSC Exchanges
i. issue and transfer of securities; and
ii. non-payment of dividend,
by listed companies or those companies which intend to get their securities listed
on any recognised stock exchange in an International Financial Services Centre,
except as provided under this Act be administered by the International Financial
Services Centres Authority by making regulations in this behalf;
b. in any other case, be administered by the Central Government.
Explanation. - For the removal of doubts, it is hereby declared that all powers relating
to all other matters relating to prospectus, return of allotment, redemption of
preference shares and any other matter specifically provided in this Act, shall be
exercised by the Central Government, the Tribunal or the Registrar, as the case may
be.
(2) The International Financial Services Centres Authority shall, in respect of matters
specified in sub-section (1), exercise the powers under sub-sections (1), (2A), (3) and
(4) of section 11, sections 11A, 11B and 11D of the Securities and Exchange Board of
India Act, 1992 (15 of 1992), as conferred upon it under section 13 of the
International Financial Services Centres Authority Act, 2019 (50 of 2019).”
Concurrent Jurisdiction
In view of the above, in respect of companies dually listed in both jurisdictions, the
powers under Companies Act, 2013 shall be administered concurrently by SEBI and IFSCA in
their respective jurisdictions.
MAINTAINING REGISTER
In terms of section 88(3) of the Companies Act, 2013, the register and index of
beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996,
shall be deemed to be the corresponding register and index for the purposes of this Act. A
comparison of the proposed models with the existing DR framework has been brought out
below:
Model 1 Model 2(A) Model 2(B) DRs
[Depository Connect] [Nominee Account – [Nominee Account -
IFSC Depository] ICSDs]
(3) The register and index (3) The register and index The ICSDs will not fall Rule 9(3) of the
of beneficial owners of beneficial owners under the category of Companies (Issue of
maintained by a depository maintained by a “depository” recognised Global Depository
under section 11 of the depository under section under the Depositories Receipts) Rules, 2014
Depositories Act, 1996, 11 of the Depositories Act, Act, 1996 and provide that -
shall be deemed to be the 1996 (22 of 1996), shall accordingly not covered
corresponding register and be deemed to be the under the current “Notwithstanding
corresponding register requirement specified anything contained
54Direct Listing of Listed Indian Companies on IFSC Exchanges
index for the purposes of and index for the under section 88(3) of under section 88 of the
this Act. purposes of this Act. Companies Act, 2013. Act, until the
The company will redemption of
The powers under therefore have to depository receipts,
The powers under Depositories Act, 1996 maintain the register of the name of the
Depositories Act, 1996 have been delegated to members in accordance overseas depository
have been delegated to IFSCA for financial with the requirements bank shall be entered
IFSCA for financial services in IFSC in terms under section 88 of the in the Register of
services in IFSC in terms of of section 13 of IFSCA Companies Act, 2013. Members of the
section 13 of IFSCA Act, Act, 2013 and section company.”
2013 and section 23G of 23G of Depositories Act,
Depositories Act, 1996. 1996. In case of DRs, the
The ICSD shall maintain name of the “overseas
The depository in IFSC is The depository in IFSC is the list of beneficial depository bank” has
also functioning under the also functioning under owners at its end and been permitted to be
provisions of Depositories the provisions of share the same with the entered in the
Act, 1996. Depositories Act, 1996. Indian depositories and register of members
RTA for various of the company.
The Depository in IFSC While the depository in regulatory purposes.
shall share BO details with IFSC shall maintain
the Indian depositories nominee account with
and RTA for various the Indian depositories,
regulatory purposes. the IFSC depository shall
maintain the list of
beneficial owners at its
end and share the same
with the Indian
depositories and RTA for
various regulatory
purposes.
The powers under Depositories Act, 1996 have been delegated to IFSCA for financial
services in IFSC in terms of section 13 of IFSCA Act, 2013 and section 23G of Depositories Act,
1996. The depository in IFSC is also covered under the provisions of Depositories Act, 1996.
Therefore, the register maintained by the IFSC Depository (similar to Indian depositories) will
be deemed to be the corresponding register and index for the purposes of this Act.
Accordingly, no change may be required under section 88 of Companies Act, 2013 for the
proposed Model 1 and Model 2(A) involving IFSC Depository.
As regards Model 2(B) involving ICSDs, it may be noted that the ICSDs are currently not
covered under the Depositories Act, 1996 and the register maintained by the ICSDs cannot be
considered as “deemed register” under section 88(3) of Companies Act, 2013. The company
will therefore have to maintain the register of members in accordance with the requirements
under section 88 of Companies Act, 2013.
Further, the IFSC Depository/ ICSDs shall maintain the list of beneficial owners at their
end and shall have necessary arrangements for sharing of information with the Indian
depositories and RTAs as mentioned in this report.
55Direct Listing of Listed Indian Companies on IFSC Exchanges
QUALIFIED INSTITUTIONAL PLACEMENTS
Qualified Institutions Placement (QIPs) paved the way for Indian corporates to access
capital in a faster and more efficient way. The efficiency and effectiveness of QIP issuances
have been notably impactful within the domestic Indian markets, showcasing a track record
of substantial success. The data of QIP issuances in domestic India is as below:
Only NSE Only BSE Both NSE and BSE Total
Period Amount Amount Amount Amount
No of No of No of No of
(₹ crore) (₹ crore) (₹ crore) (₹ crore)
issues issues issues issues
2010-11 0 0 4 267 46 24,027 50 24,294
2011-12 0 0 2 109 3 411 5 520
2012-13 0 0 0 0 11 10,488 11 10,488
2013-14 0 0 0 0 16 13,391 16 13,391
2014-15 5 2,154 46 6,816 24 27,242 39 35,397
2015-16 5 2,233 5 1,094 14 11,261 15 13,862
2016-17 0 0 0 0 20 8,464 20 8,464
2017-18 0 0 1 36 51 67,221 52 67,257
2018-19 0 0 1 113 13 8,565 14 8,678
2019-20 0 0 0 0 35 44,339 35 44,339
2020-21 0 0 0 0 31 36,013 31 78,738
2021-22 0 0 0 0 29 31,440 29 31,440
(Source: Handbook of Statistics 2022 available on SEBI website)
Now, with the emergence of IFSC, a unique opportunity arises for Indian corporates to
unlock even greater potential. Being an international financial centre, the IFSC provides a
robust infrastructure and a regulatory framework that aligns with global standards, making it
an attractive destination for foreign investors. The international exchanges in the IFSC can act
as a driver to attract foreign capital into Indian companies through the QIP issuances to select
large institutional investors, particularly considering the benefits in terms of transactions in
foreign currency, exemptions to eligible foreign investors from PAN and ITR filing
requirements etc. By enabling QIPs at the IFSC, the Indian corporates will be able to gain
access to a wider pool of global investors, diversifying their investor base and potentially
reducing the cost of capital.
Therefore, QIP issuances through IFSC Exchanges may be enabled. The requirements
relating to QIP issuances by listed Indian companies in domestic India have been detailed in
Chapter VI of SEBI ICDR Regulations. Since the companies are primarily listed on Indian
exchanges, it is suggested that the issuer may be permitted to issue QIP in IFSC subject to
compliance with the eligibility conditions specified in regulation 172 of SEBI ICDR Regulations
(with amendment in sub-section (2) for permitting listing on IFSC exchanges). This will
ensure that the companies that are eligible to make a QIP issuance in domestic India are only
permitted to make a QIP issuance in IFSC.
IFSCA may specify detailed norms for QIP issuances in IFSC. Considering that QIP
issuances are privately placed with limited participation of investors, the recognised stock
exchanges in IFSC may be required to have adequate mechanisms to ensure that the price
movements in IFSC are broadly in sync with the prices in domestic India. Further, the
recognised stock exchanges in IFSC will be required to have adequate monitoring and
surveillance mechanisms for trading in this segment.
56Direct Listing of Listed Indian Companies on IFSC Exchanges
PARTICIPATION OF INDIAN MUTUAL FUNDS
The landscape of the domestic mutual fund industry has witnessed remarkable growth
over the past may years, with the Assets Under Management (AUM) soaring from INR 5.9
trillion in 2010-1130 to INR 49 trillion as of November 30, 202331. It is expected that the
mutual fund industry will continue to grow significantly in the future particularly due to the
growing middle class and increasing financial inclusion in the country.
This rapid expansion of the industry necessitates a reevaluation of investment avenues
to ensure diversification and enhanced opportunities for domestic mutual funds. The mutual
funds also look for diversifying their portfolios in international markets. The public offers
often present an opportunity for mutual funds to diversify their portfolios by investing in
newly listed companies from different sectors. This diversification can be beneficial for
managing risk and potentially enhancing returns.
Currently, the Indian mutual funds are permitted to make overseas investments subject
to a maximum of US $ 1 billion per mutual fund, within the overall industry limit of US $ 7
billion. In this context, it has been noted that the Indian mutual funds are permitted to invest
in the ADRs and GDRs of Indian companies.
In light of this, the proposed scheme to be notified by Government of India and SEBI
may consider allowing participation of mutual funds in the Direct Listing of Indian companies
on IFSC Exchanges, as it expands the investment horizon for domestic mutual funds. This
would be at par with the current framework for ADRs and GDRs.
The Direct Listing would provide domestic mutual funds with access to a new and
diverse pool of investment opportunities, enhancing their risk-adjusted returns and portfolio
diversification. This move would integrate the IFSC with the domestic capital markets,
attracting more capital and fostering the development of IFSC as a global financial hub.
Increased participation by Indian mutual funds would enhance liquidity and potentially
improve the depth of the secondary markets of IFSC, making them more attractive to
international investors.
Granting Indian mutual funds access to IFSC listed Indian companies presents a win-
win situation for both the investors and the GIFT IFSC ecosystem. This initiative would unlock
new investment avenues, improve capital flow, and foster economic growth, ultimately
contributing to the development of a more robust and diversified financial landscape in India.
In view of the above, participation of mutual funds will be an important enabler for the
success of the proposed Direct Listing in IFSC. As regards the limit for overseas investments
by the mutual funds, the existing limit of USD 7 billion has remained unchanged since 201032,
despite the substantial growth of 8x in AUM of the mutual funds during the same period.
30 Source: Handbook of Statistics 2022 available on SEBI website
31 https://www.amfiindia.com/indian-
mutual#:~:text=Assets%20Under%20Management%20(AUM)%20of,a%20span%20of%2010%20years
32 https://www.rbi.org.in/commonperson/English/Scripts/Notification.aspx?Id=720#2
57Direct Listing of Listed Indian Companies on IFSC Exchanges
It is recommended that a separate overseas investment limit may be prescribed over
and above the current limit of USD 7 billion, earmarked specifically for investing in IFSC listed
Indian companies. To begin with 1% of the total AUM of the domestic mutual fund industry
may be considered for investments in IFSC.
MARKET MAKING
Considering that IFSC is a newly established centre with equity listing being permitted,
the market makers can play an important role due to following reasons:
a) Enhanced Liquidity
Market makers offer continuous buy and sell quotes for securities, ensuring a constant
presence of willing buyers and sellers. This active participation reduces bid-ask
spreads and facilitates smoother transactions, encouraging market activity even in
case of limited natural trading interest.
b) Price Stabilization:
In the absence of market makers, new listings might experience extreme price volatility
due to limited trading activity. Market makers can intervene by providing liquidity,
thereby aiding in effective price discovery, and prevent excessive fluctuations that
might deter investor confidence.
c) Increased Investor Confidence
The continuous presence of market makers fosters investor confidence. The assurance
of being able to buy or sell securities promptly encourages more investors to
participate in the market, leading to increased liquidity over time.
d) Robust Secondary Market
The involvement of market markers attracts institutional investors and traders by
creating a more liquid environment which leads to increase in overall trading and
robust secondary market.
The presence of market makers is required to build liquidity at the initial stage
essential for the healthy functioning of the secondary market. The presence of market makers
mitigates volatility, encourages investor participation, ensures fair pricing, and ultimately
contributes to the development of an efficient and liquid market ecosystem.
In view of the above, it is recommended that the broker dealers, including IFSC entities,
may be permitted to trade and provide market making facilities in the proposed scheme to be
notified by Government of India.
58Direct Listing of Listed Indian Companies on IFSC Exchanges
PRESS NOTE 3 COMPLIANCE
As per Press Note 3, an entity of a country, which shares land border with India or where
the beneficial owner of an investment into India is situated in or is a citizen of any such country,
can invest only under the Government route. The following approach may be considered for
ensuring compliance with the Press Note 3 requirements in IFSC:
a) AML CFT and KYC Guidelines: The brokers and custodians33 are required to identify
ultimate beneficial owners and conduct KYC and Client Due Diligence in terms of the
IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer)
Guidelines, 2022 (IFSCA AML CFT Guidelines).
The IFSCA AML CFT Guidelines provide that - “For the purpose of determination of
beneficial owner, any amendment made under sub-rule 3 of rule 9 of Rules34, shall be
applicable in addition to the requirements under these Guidelines.”
Therefore, the investors and their beneficial owners will be identified by the
intermediaries, including broker dealers and custodians (if appointed).
b) Declaration by investors: The investors will be required to provide a declaration to their
broker dealers and custodians (if appointed) regarding compliance with Press Note 3
requirements at the time of onboarding the client and periodic updation of client due
diligence.
c) Intermediaries (Broker Dealers and custodians): The broker dealers and custodians will
ensure that such investors35 sharing land border with India do not participate in the
equity shares of Indian companies listed on IFSC exchanges unless the investor submits
the approval of Govt. of India. The restriction will apply at the time of IPO/FPO as well
as secondary market trading on the exchanges.
d) Stock Exchanges: As an additional measure, the intermediaries will provide list of all
such investors to the IFSC stock exchanges. The exchanges will ensure that such
investors do not participate in the IPOs/FPOs of Indian companies listed on IFSC
exchanges. Further, as regards secondary market trading, as a surveillance measure,
the IFSC stock exchanges will monitor the trading by such investors in the equity shares
of Indian companies.
TAXATION
As per the extant provisions of the Income-tax Act, 1961 (IT Act), the mechanism for
taxation of equity shares listed on recognized stock exchanges is as under:
a) Capital Gains
33 Wherever appointed by the non-resident investor
34 Prevention of Money-Laundering (Maintenance of Records) Rules, 2005
35 Entities as per definition provided in the proviso
59Direct Listing of Listed Indian Companies on IFSC Exchanges
A specific exemption has been provided to non-residents on transfer of “foreign
currency denominated equity shares of a company”36 undertaken on a recognised stock
exchange located in IFSC and where the consideration for such transaction is paid or
payable in foreign currency.
The exemption does not make any distinction between shares of an Indian company or
a foreign company. Thus, any such capital gains on transfer of equity shares of Indian
companies listed on IFSC exchanges shall be exempt in the hands of non-residents.
b) Dividend
Dividend income is taxable at 20% or treaty rates for non-residents under section
115A/115AD of the IT Act.
However, as per section 115AC of the IT Act, dividends received on GDRs are taxed at a
rate of 10% in the hands of non-residents. Further, under section 115AD of the IT Act,
the dividend income received by Category III AIFs in IFSC is also taxed at 10%.
Similarly, dividends issued by IFSC units to non-resident shareholders is taxable at the
rate of 10% under section 115A(1)(A) of the IT Act.
Likewise, a concessional tax rate of 10% may be provided for the dividend received
from shares of Indian listed companies on IFSC stock exchanges. The withholding tax
regime should be aligned with the same as well.
c) Buy-back of shares:
As per section 115QA of the IT Act, any income distributed by a company through a
share buy-back from a shareholder is subject to a 20% tax in the hands of the company
on the distributed income and is exempt from tax in the shareholders’ hand under
section 10(34A) of the IT Act.
d) PAN and return filing:
As per Rule 114AAB of the Income-tax Rules, 1962, eligible foreign investors are not
required to obtain a PAN if such investors do not earn any income in India, other than
the income from transfer of a capital asset referred to in section 47(viiab) of the IT Act.
However, if such investors receive dividend income, they might be required to obtain a
PAN and file return in India.
Recommendations
a) The tax on dividend may be reduced to 10% for shareholders in IFSC. This would be in
line with the DR framework.
36 Notification No. 16/2020 dated 5 March 2020 issued under section 47(viiab) of the IT Act
60Direct Listing of Listed Indian Companies on IFSC Exchanges
b) Going forward, trading of Right Entitlements (RE) issued on equity shares listed on
IFSC exchanges, may also be included in the list of specified securities under section
47(viiab) of the IT Act.
c) The exemption from obtaining PAN and return filing may be extended to the eligible
foreign investors even if they earn dividend income from the shares of Indian
companies listed on IFSC exchanges, provided the Indian companies have
appropriately withheld taxes on such dividend income at applicable rates. This can
directly be applied by introducing the aforesaid dividend rate under section 115A(1)
read with section 115A(5) of IT Act.
FEM (NDI) RULES, 2019
The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules)
prescribed by the Central Government under the Foreign Exchange Management Act, 1999
(FEMA) provide the framework for foreign investments into non-debt instruments in India.
The NDI Rules has several schedules for investments in India through various routes. These
Rules provide the requirements relating to eligible investors, investment limits, reporting
requirements, repatriation of funds etc.
The requirements relating to foreign investments into Indian companies through
Depository Receipts have been provided in Schedule IX of the NDI Rules. The extant NDI Rules
will be required to be amended to provide the enabling provisions for foreign investments
into Indian companies through listing and trading of securities on the international stock
exchanges in IFSC.
In this context, the following enablers would be required in the NDI Rules for
operationalizing direct listing of Indian companies on IFSC Exchanges:
a) Issue and trading of equity shares of Indian Companies on IFSC Exchanges
(initial issue and further issue of capital)
b) Clarity on applicability of FPI limits37
c) Enabling Indian companies to pass on all the corporate actions/benefits to the
equity shareholders in IFSC, including the below:
Dividend Payment of Dividend by Indian companies to shareholders in
IFSC.
Rights Issues38 Allow Rights Issue by Indian companies to the shareholders
in IFSC, in accordance with the provisions of Companies Act,
2013
37 It is understood that this matter is being examined by DEA and RBI
38 While the NDI Rules currently deal with rights issue and issue of bonus shares to non-residents, in the case of
direct listing there will be cross-jurisdiction movement of equity shares / rights entitlement/ funds. Therefore,
the necessary clarifications may be provided.
61Direct Listing of Listed Indian Companies on IFSC Exchanges
This would include issue of Rights Entitlements (REs) to
shareholders in IFSC, trading of REs in IFSC, and issuance of
equity shares to shareholders in IFSC pursuant to acceptance
of subscription amount.
Issue of Bonus Allow issue of bonus shares by Indian companies to investors
Shares in IFSC. Further, in this regard, there may also be payments
involved in respect of any fractional entitlement of bonus
shares.
d) Takeovers (Open Offers)
The acquirer triggering open offer requirements shall be required to make open offer
to the public shareholders in both jurisdictions. The shareholders in IFSC may be
permitted to participate in the open offers made by acquirers in India.
a) Buy-back of Securities
The buy-back offer shall be required to be made to shareholders in both jurisdictions.
The shareholders in IFSC may be permitted to participate in the buy-back offers made
by listed companies in India.
b) Delisting
The promoters may delist equity shares from the stock exchanges in IFSC. In such
cases, the promoters will be required to make delisting offer to the remaining
shareholders in IFSC. The shareholders in IFSC may be permitted to participate in the
delisting offers.
c) Corporate Restructuring
The NDI Rules may also permit issue / cancellation of equity shares of the shareholders
in IFSC, pursuant to corporate restructuring (merger, amalgamation, demerger etc.) of
Indian Companies.
OTHER RECOMMENDATIONS – DEPOSITORY RECEIPTS OF UNLISTED INDIAN
COMPANIES ON IFSC EXCHANGES
During the discussion on Direct Listing of Indian companies, the regulatory aspects
regarding Depository Receipts were also discussed, particularly with respect to DRs of listed
vis-a -vis unlisted company. In this regard, the Sahoo Committee report inter alia
recommended that –
The DRs should be allowed to be issued on any kind of securities and not on equity
shares only. These securities could be issued by any entity, company - public or
62Direct Listing of Listed Indian Companies on IFSC Exchanges
private, listed or unlisted - mutual funds, government or any other issuer. However,
these securities should be available in dematerialised form and should be
accessible to residents outside India under the extant Foreign Exchange
Management Act, 1999 (FEMA).
DR Scheme 2014
From the definitions of ‘Depository Receipts’ and ‘Permissible Securities’ provided in
the DR Scheme notified by Government of India in 2014, it is noted that the DR Scheme
permits issuance of DRs by private companies also, as mentioned below:
Definition of ‘Depository Receipts’ (clause 2(1)(a) of DR Scheme 2014):
‘depository receipt’ means a foreign currency denominated instrument, whether listed on
an international exchange or not, issued by a foreign depository in a permissible
jurisdiction on the back of permissible securities issued or transferred to that foreign
depository and deposited with a domestic custodian and includes ‘global depository
receipt’ as defined in section 2(44) of the Companies Act, 2013;
Definition of ‘permissible securities’ (clause 2(1)(h) of DR Scheme 2014):
‘permissible securities’ mean ‘securities’ as defined under section 2(h) of the Securities
Contracts (Regulation) Act, 1956 and include similar instruments issued by private
companies which:
i. may be acquired by a person resident outside India under the Foreign Exchange
Management Act, 1999; and
ii. is in dematerialised form.”
Companies Act, 2013
Further, in terms of section 41 of Companies Act, 2013, any company (including
unlisted company) can issue DRs, as mentioned below:
“A company may, after passing a special resolution in its general meeting, issue depository
receipts in any foreign country in such manner, and subject to such conditions, as may be
prescribed.”
Rule 3 of the Companies (Issue of Global Depository Receipts) Rules, 2014, also allow
any company to issue DRs provided it is eligible under the relevant provisions of FEMA Rules
and Regulations, as mentioned below:
“3 Eligibility to Issue Depository Receipts.
A company may issue depository receipts provided it is eligible to do so in terms of the
Scheme and relevant provisions of the Foreign Exchange Management Rules and
Regulations.”
63Direct Listing of Listed Indian Companies on IFSC Exchanges
Foreign Exchange Management (Non-Debt Instrument) Rules, 2019
The NDI Rules also permit issuance of DRs by unlisted Indian Companies. The
definition of “depository receipt” provided in Rule 2(g) of NDI Rules has been reproduced
below:
“depository receipt” means a foreign currency denominated instrument, whether listed
on an international exchange or not, issued by a foreign depository in a permissible
jurisdiction on the back of eligible securities issued or transferred to that foreign
depository and deposited with a domestic custodian and includes ‘global depository
receipt’ as defined in the Companies Act, 2013 (18 of 2013)
In view of the above, DRs of unlisted companies are also permitted under the
provisions of DR Scheme, Companies Act, 2013, Companies (Issue of Global Depository
Receipts) Rules, 2014 and NDI Rules.
Income Tax Act, 1961
However, the provisions of Income Tax Act, 1961 were amended in 2015 and the
taxation benefits applicable to DRs were made available only to DRs of listed Indian
companies. The Explanation to Section 115ACA of Income Tax Act, 1961 provides the
following definition of Global Depository Receipts (GDR):
"Global Depository Receipts" means any instrument in the form of a depository receipt or
certificate (by whatever name called) created by the Overseas Depository Bank outside
India or in an International Financial Services Centre and issued to investors against the
issue of, -
(i) ordinary shares of issuing company, being a company listed on a recognised stock
exchange in India; or
(ii) foreign currency convertible bonds of issuing company;
(iii) ordinary shares of issuing company, being a company incorporated outside India, if
such depository receipt or certificate is listed and traded on any International Financial
Services Centre;
As the above-mentioned definition of GDR includes the DRs of only listed companies,
therefore, the working group recommends that the taxation benefits available to the DRs of
listed companies may also be extended to DRs of unlisted Indian Companies provided that the
DRs are listed on IFSC exchanges. This may require amendment in the definition of GDR as
mentioned in IT Act. The DR route will enable raising of foreign capital by the unlisted
companies through issuance and listing on the IFSC Exchanges. This would be in line with the
DR framework notified by various authorities in India.
64Direct Listing of Listed Indian Companies on IFSC Exchanges
IFSCA (Issuance and Listing of Securities) Regulations, 2021
As regards regulatory framework in IFSC, the definition of DRs provided in Regulation
2(g) of IFSCA ILS Regulations provide that –
“DR” or “depository receipt” means a negotiable financial instrument representing
underlying securities of a company listed in another jurisdiction.
Accordingly, currently, the regulations issued by IFSCA do not permit DRs of unlisted
companies.
Recommendations
a) The definition of Global Depository Receipts provided in the Income Tax Act, 1961 may
be amended to include unlisted Indian Companies, provided DRs are listed on the IFSC
Exchanges.
b) The IFSCA ILS Regulations may be amended to permit listing and trading of DRs of
unlisted Indian companies on IFSC Exchanges.
c) In such cases wherein DRs of unlisted Indian companies are listed on IFSC exchanges
and subsequently the company intends to list securities on Indian exchanges, specific
provision in respect of the pricing of securities, conversion of depository receipts etc.
may require to be made in the SEBI ICDR Regulations.
65Direct Listing of Listed Indian Companies on IFSC Exchanges
CHAPTER VI: SUMMARY OF RECOMMENDATIONS
S.
Recommendations Legal Framework Stakeholders
No.
Depository Connect
SEBI ICDR Regulations for
Direct Depository Connect to be Direct Listing
established between Indian depositories (Chapter for Direct Listing)
1 SEBI, IFSCA
(CDSL & NSDL) and IFSC depository (IIDI)
IFSCA ILS Regulations39
Amendments in
IIDI connecting with NSDL & CDSL by Depositories Act, 1996, DP
2 opening nominee account Regulations and IFSCA CMI SEBI, IFSCA
Regulations
Permitting ICSDs to provide depository SEBI ICDR Regulations
3 services IFSCA ILS Regulations SEBI, IFSCA
First time listing / FPO solely in IFSC
Permitting Indian companies to list equity
SEBI ICDR Regulations
shares on IFSC exchanges in accordance
IFSCA ILS Regulations
4 with IFSCA ILS Regulations, subject to SEBI, IFSCA
compliance with regulations 102, 103 &
105 of SEBI ICDR Regulations
Stock Exchanges in
In-Principle approval only after receipt of India and IFSC
5 NOCs from all recognised stock exchanges Process
where company is listed SEBI, IFSCA
The minimum promoters’ contribution
may not be mandated for FPOs made solely
6 - IFSCA
on the recognised stock exchanges in IFSC
Specify detailed guidelines on submission
of due-diligence certificate, participation IFSCA ILS Regulations
7 IFSCA
of anchor investor etc. in IFSC
FPO solely in India
In-Principle approval only after receipt of Stock Exchanges in
8 NOCs from all recognised stock exchanges India and IFSC
where company is listed SEBI, IFSCA
39 Considering that listing of Indian companies on IFSC exchanges is already covered under the IFSCA ILS
Regulations, the recommendations mentioned in the table may be implemented in the form of amendments to
the Regulations or through issue of circulars / guidelines under the Regulations.
66Direct Listing of Listed Indian Companies on IFSC Exchanges
S.
Recommendations Legal Framework Stakeholders
No.
Simultaneous FPO in both jurisdictions
SEBI ICDR Regulations
Offer size to be separate in both markets
9 IFSCA ILS Regulations SEBI
The provisions of Chapter IV of SEBI ICDR
Regulations to mutatis mutandis apply in
IFSC, unless specified otherwise, with such
IFSCA
exceptions mentioned in this report (such
10 IFSCA ILS Regulations (in coordination with
as listing process, offer related activities,
SEBI)
filing a copy of documents, no separate
advertisement in IFSC etc.)
SEBI ICDR Regulations
Common Offer Document by SEBI
11 IFSCA ILS Regulations SEBI, IFSCA
registered merchant bankers
SEBI ICDR Regulations
Listing on same date on stock exchanges in
12 IFSCA ILS Regulations SEBI, IFSCA
domestic India and IFSC
Preferential Issue
The provisions of Chapter V of SEBI ICDR
Regulations to mutatis mutandis apply in IFSCA
IFSCA ILS Regulations
13 IFSC, unless specified otherwise, except (in coordination with
the listing process. SEBI)
Permitting listing of equity shares allotted
in a preferential issue on the recognised Amendment in regulation
14 SEBI
stock exchanges in IFSC 160 of ICDR Regulations
Stock Exchanges in
In-Principle approval only after receipt of India and IFSC
15 NOCs from all recognised stock exchanges
where company is listed SEBI, IFSCA
SEBI ICDR Regulations
Listing on same date on stock exchanges in
16 IFSCA ILS Regulations SEBI, IFSCA
domestic India and IFSC
Pricing formula (VWAP, frequently traded
shares definition) to consider trading on Part IV of Chapter V of SEBI
17 SEBI
IFSC Exchanges also ICDR Regulations
Rights Issue
The provisions of Chapter III of SEBI ICDR
IFSCA
Regulations to mutatis mutandis apply,
18 IFSCA ILS Regulations (in coordination with
unless specified otherwise, with such
SEBI)
exceptions mentioned in this report (such
67Direct Listing of Listed Indian Companies on IFSC Exchanges
S.
Recommendations Legal Framework Stakeholders
No.
as listing process, filing a copy of
documents, trading of Rights Entitlements,
no separate advertisement in IFSC etc.)
SEBI ICDR Regulations
Common Offer Document by SEBI
19 IFSCA ILS Regulations SEBI, IFSCA
registered merchant bankers
Stock Exchanges in
In-Principle approval only after receipt of India and IFSC
20 NOCs from all recognised stock exchanges
where company is listed SEBI, IFSCA
Pricing of rights issue to be same in both SEBI ICDR Regulations
21 jurisdictions IFSCA ILS Regulations SEBI, IFSCA
To enable process for participation of the
SEBI
shareholders in IFSC in the rights issue by
22 SEBI ICDR Regulations (in coordination with
the Indian companies
IFSCA)
The issuer to be eligible for Rights Issue
through fast track route only if there is no SEBI ICDR Regulations
23 SEBI
corresponding regulatory action by any of
the two regulators (SEBI and IFSCA)
Dividend
Dividend to be distributed to shareholders
24 - SEBI, IFSCA
in IFSC
Bonus Issue
The provisions of Chapter XI of SEBI ICDR IFSCA
25 Regulations to mutatis mutandis apply, IFSCA ILS Regulations (in coordination with
unless specified otherwise SEBI)
Minimum Public Shareholding
Requirement of Minimum Public
SCR Rules DEA
26 Shareholding to be complied separately in
India and IFSC
Takeovers
SEBI SAST Regulations to mutatis mutandis
apply, unless specified otherwise, with
New regulations / circular IFSCA
such exceptions mentioned in this report
27 by IFSCA (in coordination with
(filing a copy of documents, no separate
SEBI)
advertisement in IFSC etc.)
SEBI SAST Regulations to apply on
28 SEBI SAST Regulations SEBI
“combined basis”
68Direct Listing of Listed Indian Companies on IFSC Exchanges
S.
Recommendations Legal Framework Stakeholders
No.
Open offers to be made in domestic India
and extended to shareholders in both
jurisdictions
SEBI (in coordination
29 SEBI SAST Regulations
To enable process for participation of the with IFSCA)
eligible shareholders in IFSC in the Open
Offers made by acquirer
SEBI SAST Regulations
Pricing of Open Offers to be same in both
New regulations / circular
30 jurisdictions SEBI, IFSCA
by IFSCA
Pricing formula (VWAP, frequently traded
shares definition) to consider trading on Regulation 8 of SEBI SAST
31 SEBI
IFSC Exchanges also Regulations
Buy-backs
SEBI Buy-back Regulations
Buy-Backs in IFSC to be permitted only
New regulations / circular
32 through Tender Offer Route SEBI, IFSCA
by IFSCA
SEBI Buy-back Regulations to mutatis
mutandis apply, unless specified otherwise,
New regulations / circular IFSCA
with such exceptions mentioned in this
33 by IFSCA (in coordination with
report (filing a copy of documents, no
SEBI)
separate advertisement in IFSC etc.)
SEBI Buy-back Regulations to apply on
34 “combined basis” SEBI Buy-back Regulations SEBI
Buy-back offers to be made in domestic
India and extended to shareholders in both
jurisdictions
SEBI (in coordination
35 SEBI Buy-back Regulations
To enable process for participation of the with IFSCA)
eligible shareholders in IFSC in the buy-
back offers made by the company
Pricing of Buy-back Offers to be same in
SEBI Buy-back Regulations
both jurisdictions
36 New regulations / circular SEBI, IFSCA
by IFSCA
Delisting
The issuer to have the option to delist from SEBI Delisting Regulations
SEBI, IFSCA
37 either of the two jurisdictions
IFSCA ILS Regulations
69Direct Listing of Listed Indian Companies on IFSC Exchanges
S.
Recommendations Legal Framework Stakeholders
No.
IFSC stock exchanges
to specify delisting
norms with approval
of IFSCA
In case of simultaneous delisting from both
jurisdictions, if the delisting fails in any one SEBI Delisting Regulations
38 jurisdiction, the entire delisting exercise IFSCA/SEBI
shall be considered as failure IFSCA ILS Regulations
Scheme of Arrangement
IFSCA to specify the framework for
providing NOCs on Scheme of
39 Arrangement of Indian companies listed Circular by IFSCA IFSCA
on the recognized stock exchanges in IFSC
Disclosures
A copy of all the disclosures made on
Indian stock exchanges to be disclosed on
the IFSC stock exchanges.
Stock Exchanges in
40 IFSCA ILS Regulations
The stock exchanges in India and IFSC to IFSC and India
have necessary arrangements/
agreements in this regard
Market Surveillance
The stock exchanges in IFSC to build
necessary infrastructure in the medium to
Stock Exchanges in
41 long term to make the necessary data
IFSC
available to IFSCA and also to SEBI on need
basis
FPIs trading in IFSC to provide PAN details
42 IFSCA
Need to have unique identifier for eligible
foreign investors in IFSC
Information Sharing between Depositories / RTA
The depository in IFSC to share BenPos
43 SEBI, IFSCA
Statement with RTA in domestic India
The depository in IFSC to share required Depositories in India
data to the Indian depositories for and IFSC
44
monitoring of foreign limits
SEBI, IFSCA
70Direct Listing of Listed Indian Companies on IFSC Exchanges
S.
Recommendations Legal Framework Stakeholders
No.
Cooperation between IFSCA and SEBI
IFSCA and SEBI may consider having a
bilateral MoU for cooperation and
45 SEBI, IFSCA
exchange of information
QIPs
Framework for Qualified Institutions
46 Placement in IFSC to be specified IFSCA ILS Regulations IFSCA
Participation of Indian Mutual Funds
Indian mutual funds to be permitted to
participate in Direct Listing
47 Direct Listing Scheme DEA
Separate limit for IFSC may be considered
(1% of total AUM)
Market Making
Broker dealers, including IFSC entities, to
48 be permitted to provide market making Direct Listing Scheme DEA
Companies Act, 2013
Rules to be notified under section 23(3)
49 and (4) of Companies Act, 2013 LEAP Rules MCA
FEM (NDI) Rules 2019
NDI Rules to permit Direct Listing
including the following:
a. Permitting issue and trading of equity
shares of Indian Companies on IFSC
Exchanges (initial issue and further
issue of capital)
DEA (in consultation
50 NDI Rules
with RBI)
b. Clarity on applicability of FPI limits
c. Enabling Indian companies to pass on
all the corporate actions/benefits to
the equity shareholders in IFSC
indicated in the report
71Direct Listing of Listed Indian Companies on IFSC Exchanges
S.
Recommendations Legal Framework Stakeholders
No.
d. Enabling participation of shareholders
in IFSC in the open offers made by
acquirers in India
e. Enabling participation of shareholders
in IFSC in the buy-back offers made by
the Indian companies
f. Enabling participation of shareholders
in IFSC in the delisting offers made by
the promoters of the Indian companies
g. Permitting issue / cancellation of
equity shares of the shareholders in
IFSC pursuant to corporate
restructuring (merger, amalgamation,
demerger etc.) of Indian Companies
Taxation
Concessional rate of tax (10%) for
Dividend to be received by Non-Residents
51 Income Tax Act, 1961 CBDT, DoR
from Indian company listed on IFSC
exchanges
Exemption of PAN and ITR filing for Non-
Residents having only Dividend income
from the Indian companies listed on IFSC
52 Income Tax Act, 1961 CBDT, DoR
Exchanges, subject to the condition that
Indian company has withheld the taxes at
appropriate rate
Trading of Right Entitlements to be
Notification under section
included in the list of specified securities
53 47(viiab) of Income Tax CBDT, DoR
under section 47 (viiab) of Income Tax Act,
Act, 1961
1961
Other Recommendations (Permitting DRs of unlisted companies)
Amendment in the definition of Global
Depository Receipts under IT Act to
include DRs of unlisted Indian Companies,
54 Income Tax Act, 1961 CBDT, DoR
provided the DRs are listed on the IFSC
Exchanges
Permit listing and trading of DRs of
unlisted Indian companies on IFSC
55 IFSCA ILS Regulations IFSCA
Exchanges
Indian companies with DRs listed first on
IFSC exchanges may be permitted to
56 SEBI ICDR Regulations SEBI
subsequently list equity shares in India
72Direct Listing of Listed Indian Companies on IFSC Exchanges
Notes:
1. While the Working Group has identified various aspects relating to implementation of
direct listing of listed Indian companies, the list of recommendations may not necessarily
be exhaustive. In this regard, IFSCA and SEBI may continue to engage for operationalizing
Direct Listing.
2. The Working Group has been informed that the regulatory changes by SEBI would entail
due process including legal diligence, deliberation at advisory committee and subsequent
public consultation.
73Direct Listing of Listed Indian Companies on IFSC Exchanges
ANNEXURE – 1: DIRECT LISTING: ANALYSIS BY SUB-GROUP
1. Further public offer of equity shares on Indian stock exchanges and IFSCA stock exchanges
The further public offer of equity shares of listed Indian companies on IFSC exchanges may be possible under the following scenarios:
c) First listing on IFSC Exchange
d) Pursuant to company listed in both markets (India and IFSC),
a. FPO only on Indian exchanges
b. FPO only on IFSC exchanges
c. FPO in both markets
A detailed analysis of the various activities involved in FPOs for the above scenarios have been brought out below:
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
1. Company to notify the stock exchanges This disclosure will be made Disclosures under SEBI LODR Regulations
under Regulation 29(1)(d) of the SEBI only on Indian stock
LODR Regulations in relation to the meeting exchanges.
74Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
of its Board to be held to consider the Not required to be disclosed In respect of dual listed companies, all disclosures made on Indian stock
further public issue. on IFSC exchanges as the exchanges shall be disclosed on IFSC Exchanges through appropriate
company is not listed on IFSC agreements/ arrangements between exchanges.
exchange.
2. Board resolution to be passed by the
Company for approval of the further public Board Resolution - Requirement under Companies Act, 2013 and will continue to apply
offer of equity shares proposed to be listed
on the Indian stock exchanges and IFSCA
stock exchanges under sections 23 and
62(1)(c) of the Companies Act, 2013, as
amended (“Companies Act”), the
Companies (Prospectus and Allotment of
Securities) Rules, 2014, as amended, the
Companies (Share Capital and Debentures)
Rules, 2014, as amended, and the SEBI ICDR
Regulations, as amended.
3. Outcome of the Board Meeting to be This disclosure will be made Disclosures under SEBI LODR Regulations
disclosed to the stock exchanges within 30 only on Indian stock
minutes from the end of the Board Meeting. exchanges. In respect of dual listed companies, all disclosures made on Indian stock
exchanges shall be disclosed on IFSC Exchanges through appropriate
agreements/ arrangements between exchanges.
75Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
Not required to be disclosed
on IFSC exchanges as the
company is not listed on IFSC
exchange.
4. Shareholders’ resolution to be passed by
the Company for approval of the further Shareholders’ Resolution - Requirement under Companies Act, 2013 and will continue to apply
public offer of equity shares proposed to be
listed on the Indian stock exchanges and
IFSCA stock exchanges under sections 23
and 62(1)(c) of the Companies Act, 2013,
the Companies (Prospectus and Allotment
of Securities) Rules, 2014, as amended, the
Companies (Share Capital and Debentures)
Rules, 2014, as amended, and the SEBI ICDR
Regulations, as amended.
5. Appointment of lead managers and other IFSCA registered lead SEBI registered lead IFSCA registered lead SEBI registered
Intermediaries in terms of the Regulation managers and other managers and other managers and other merchant bankers
121 of the SEBI ICDR Regulations and enter intermediaries will have to intermediaries will intermediaries will
into agreements with the lead managers be appointed have to be appointed have to be appointed
and other intermediaries. (Reg. 42 of the IFSCA ILS (Reg. 121 of SEBI ICDR (Reg. 42 of the IFSCA
Regulations) Regulations) ILS Regulations)
76Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
6. Check the eligibility criteria mentioned Eligibility criteria - SEBI ICDR Regulations [Same as column II] SEBI ICDR Regulations
under Regulations 102, 103, 104 and 105 of - IFSCA ILS Regulations IFSCA ILS Regulations
the SEBI ICDR Regulations. - Direct Listing Scheme Direct Listing Scheme
- Reg. 102 of SEBI ICDR
Regulations is on entities
not eligible to make an
FPO. This shall apply to
companies listing on
IFSC exchanges as well.
- Conditions provided
under reg. 103 & 105 of
SEBI ICDR Regulations
shall apply to companies
listing on IFSC exchanges
as well.
Reg. 104 of SEBI ICDR (a) In-Principle (a) Same as column II (a) In-Principle
Regulations - approval may be approval may be
required from Indian (b) Agreement with required from stock
Exchanges depository in IFSC exchanges in both
required jurisdictions
77Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
(a) In-Principle approval (However, Indian
may be required from IFSC Exchanges shall take (c) The existing (b) Agreement with
Exchanges. NOC from IFSC equity shares should depositories in both
exchanges prior to be fully paid-up jurisdictions required
(However, IFSC Exchanges granting approval)
shall take NOC from Indian (c) The existing equity
exchanges prior to granting (b) As per ICDR shares should be fully
approval) paid-up
(b) Agreement with
depository in IFSC also (c) As per ICDR
required
(c) The existing equity shares
should be fully paid-up
7. Preparing a draft offer document (“DOF”) in The disclosure requirements SEBI ICDR Regulations [Same as column II] Common DOF
terms of Regulation 122 of the SEBI ICDR for the DOF shall be in terms
Regulations, in terms of: of Regulation 47 of the IFSCA SEBI registered
(i) disclosures specified in the Companies ILS Regulations. merchant bankers
Act, 2013; and
78Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
(ii) disclosures specified in Part A of Processing of DOF by
Schedule VI, subject to the provisions of SEBI in accordance with
Parts C and D. SEBI ICDR Regulations.
8. Analyze whether the promoter contribution No such requirement may be SEBI ICDR Regulations [Same as column II] SEBI ICDR Regulations
requirement will be applicable in terms of specified for listing on IFSC
the Regulation 112 and 113 of the SEBI Exchanges While the calculation
ICDR Regulations. shall be on combined
basis, the promoter
contribution and lock in
shall be in India
9. In case the promoter contribution is No such requirement may be SEBI ICDR Regulations [Same as column II] SEBI ICDR Regulations
applicable – earmark 20% of the proposed specified for listing on IFSC
issue size or to the extent of 20% of the Exchanges While the calculation
post-FPO capital of the Company, to be shall be on combined
locked up from the date of allotment of the basis, the promoter
FPO, in terms of Regulation 115 of the SEBI contribution and lock in
ICDR Regulations. shall be in India
10. Execution of agreement of the Company Will be required Will be required Will be required Will be required
with the IFSC Depository i.e., India
International Depository IFSC Ltd. (“IIDI”),
79Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
and the Registrar and Share Transfer Agent
of the Company, in addition to the Indian
depositories, NSDL and CDSL, for admission
of the fresh equity shares of the company
into the IIDI system
11. Board Meeting to approve the Draft Offer Will continue to apply Will continue to apply Will continue to Will continue to apply
document apply
12. The Company shall file the DOF with In terms of the Regulation 16 SEBI ICDR Regulations In terms of the DOF filed with SEBI
Securities Exchange Board of India (“SEBI”), of the IFSCA ILS Regulations Regulation 16 of the
in accordance with Schedule IV, along with DOF will have to be filed with IFSCA ILS [Copy of DOF may be
fees as specified in Schedule III of the SEBI IFSCA. Regulations DOF will filed with IFSCA for
ICDR Regulations, through the lead have to be filed with information]
manager(s). Proportionate fees to be paid IFSCA.
to IFSCA
13. In terms of Regulation 123 (3) of the SEBI In terms of the Regulation 16 SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, the Company shall also (2) of the ILS Regulation,
file the DOF with the stock exchange(s) DOF shall be made public, for [Copy of DOF may be
where the equity shares are proposed to be comments, if any, by hosting filed with IFSC
listed, and shall submit to the stock it on the websites of IFSCA, Exchanges as well]
exchange(s), the Permanent Account
80Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
Number, bank account number and stock exchange(s) and lead
passport number of its promoters where manager(s).
they are individuals, and Permanent
Account Number, bank account number,
company registration number or equivalent
and the address of the Registrar of
Companies with which the promoter is
registered, where the promoter is a body
corporate.
14. In terms of Regulation 104(1)(a) of the SEBI In terms of the Regulation 43 SEBI ICDR Regulations Same as column II In-Principle approval
ICDR Regulations, the Company is required of the IFSCA ILS Regulations, from exchanges in both
to file an application with the stock in-principal approval will be Prior to granting in- jurisdictions
exchanges for obtaining in-principal required from IFSC Exchange principle approval,
approval from the stock exchanges. Indian exchanges shall
Prior to granting in-principle take NOC from IFSC
approval, the IFSC exchange Exchanges on which
shall take NOCs from Indian the companies are
Exchanges on which the listed.
companies are listed.
15. In terms of Regulation 124 of the SEBI ICDR In terms of the Regulation 16 SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
Regulations, the DOF filed with SEBI shall (2) DOF shall be made public,
81Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
be made public for comments, if any, for a for comments, if any, by DOF shall be uploaded
period of at least twenty-one days from the hosting it on the websites of on websites of IFSC
date of filing, by hosting it on the websites IFSCA, stock exchange(s) and exchanges and IFSCA as
of the Company, SEBI, stock exchanges lead manager(s) for a period well.
where specified securities are proposed to of not less than fourteen
be listed and lead manager(s) associated days.
with the issue.
16. In terms of Regulation 123 (4) of the SEBI In terms of Regulation 17 of SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, SEBI may specify the IFSCA ILS Regulations,
changes or issue observations on the DOF IFSCA may specify changes
within a period of thirty days. or issue observations on the
DOF within a period of thirty
days.
17. In terms of Regulation 123 (5) of the SEBI In terms of Regulation 18 of SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, if SEBI specifies changes the ILS Regulation, the
or issues observations on the DOF, the Company shall carry out
Company and the lead manager(s) shall changes specified by IFSCA, if
carry out such changes in the DOF and shall any, in the offer document
submit to SEBI an updated DOF complying
with the observations issued by SEBI and
highlighting all changes made in the DOF
82Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
before filing the offer document (“OD”) with
the Registrar of Companies or the
appropriate authority, as applicable.
18. Board Meeting to approve the Offer Will continue to apply Will continue to apply Will continue to Will continue to apply
document including Bid/Offer Opening and apply
Bid/Offer Closing Dates (including Anchor
Investor bid date)
19. In terms of Regulation 123 (6) of the SEBI OD required to be filed with SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, post incorporation of IFSCA and IFSC stock
changes suggested in the DOF, the Company exchanges Copy of OD may be filed
is required to file copy of the OD with SEBI with IFSCA and IFSC
and the stock exchanges through the lead [Regulation 19 of the IFSCA stock exchanges as well.
manager(s) simultaneously while filing the ILS Regulations]
OD with Registrar of Companies.
20. In terms of Regulation 123 (9) of the SEBI Similar requirements may be SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, the lead manager(s) shall specified by IFSCA for the
submit the following documents to SEBI lead manager (s) to submit
after issuance of observations by SEBI or due diligence certificate
after expiry of the period stipulated in sub- (along with other
documents) to IFSCA.
83Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
regulation (4) of regulation 123 if SEBI has
not issued observations:
a) a statement certifying that all changes,
suggestions and observations made by SEBI
have been incorporated in the offer
document;
b) a due diligence certificate as per Form C
of Schedule V, at the time of filing of the offer
document;
c) a copy of the resolution passed by SEBI of
directors of the Company for allotting
specified securities to promoters towards
amount received against promoters’
contribution, before opening of the issue, if
applicable;
d) a certificate from a Chartered
Accountant, before opening of the issue,
certifying that promoters’ contribution has
been received in accordance with these
regulations, accompanying therewith the
names and addresses of the promoters who
have contributed to the promoters’
contribution and the amount paid and
84Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
credited to the bank account of the
Company by each of them towards such
contribution;
e) a due diligence certificate as per Form D
of Schedule V, in the event the Company has
made a disclosure of any material
development by issuing a public notice.
21. In terms of Regulation 139(1) of the SEBI May not be required to be SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, the Company shall, after mandated in the case of IFSC.
filing the OD with the Registrar of The investors are non-
Companies, make a pre-issue residents and mostly outside
advertisement in one English national daily of India. OD will be available
newspaper with wide circulation, Hindi on the website of the IFSC
national daily newspaper with wide exchanges.
circulation and one regional language
newspaper with wide circulation at the
place where the registered office of the
Company is situated.
22. In terms of Regulation 127 (4) of the SEBI In terms of Regulation 28 of
ICDR Regulations, the Company shall the SEBI ICDR Regulations,
announce the floor price or the price band the Company shall determine
85Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
at least one working day before the opening the pricing in consultation
of the bid in the same newspapers in which with the lead manager(s).
the pre-issue advertisement was released The issue may be through a
or together with the pre-issue fixed price mechanism or
advertisement in the format prescribed through book building
under Part A of Schedule X. mechanism and the same
shall be suitably disclosed in
the offer document.
23. In terms of Regulation 135 of the SEBI ICDR May not be required in IFSC SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
Regulations, the Company shall, before the
opening of the subscription list, deposit
with the designated stock exchange, an
amount calculated at the rate of one per
cent. of the issue size available for
subscription to the public in the manner
specified by SEBI and/or the stock
exchange(s).
24. In terms of the Schedule XIII (Part A) (10) of Details regarding SEBI ICDR Regulations Same as column II Anchor Investors in
the SEBI ICDR Regulations, the bidding for participation of anchor India – As per SEBI ICDR
anchor investors shall open one day before investor may be mentioned Regulations
in the offer document.
86Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
the issue opening date. Board resolutions Anchor investors in IFSC
for Anchor Issue Opening and Closing. IFSCA may take a view on [Same as column II]
whether a policy may be
specified in this regard.
25. In terms of Regulation 140 of the SEBI ICDR IFSCA may consider SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
Regulations, the issue shall be opened after specifying appropriate
at least three working days from the date of timelines in this regard
filing the OD with the Registrar of
Companies. Board resolution for the
opening of the Issue.
26. Board resolution for the closing of the Issue. Will continue to apply Will continue to apply Will continue to Will continue to apply
apply
27. Board resolution for approving the Will continue to apply Will continue to apply Will continue to Will continue to apply
prospectus. apply
28. In terms of Regulation 123 (6) of the SEBI Prospectus to be filed with SEBI ICDR Regulations Same as column II SEBI ICDR Regulations
ICDR Regulations, the Company is required IFSCA and IFSC stock
to file copy of the prospectus with SEBI and exchanges. A copy of the Prospectus
the stock exchanges through the lead may be filed with IFSCA
manager(s) simultaneously while filing the and IFSC exchanges as
prospectus with Registrar of Companies. well.
87Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
29. In terms of Regulation 136 of the SEBI ICDR May be underwritten by an SEBI ICDR Regulations Same as column II SEBI ICDR Regulations –
Regulations, the Company will enter into an underwriter and in such a Offer made in India
Underwriting Agreement with the lead case, adequate disclosures
managers and syndicate members regarding underwriting IFSCA ILS Regulations -
arrangements shall be Offer made in IFSC
disclosed in the offer
document.
[Regulation 31 of the IFSCA
ILS Regulations]
30. Finalisation of Basis of Allotment (post As per Offer Document SEBI ICDR Regulations Same as Column II SEBI ICDR Regulations –
technical rejections) and submission to Offer made in India
designated stock exchanges
As per Offer Document –
Offer made in IFSC
31. Basis of Allotment to be approved by the As per Offer Document SEBI ICDR Regulations Same as Column II SEBI ICDR Regulations –
Stock Exchange Offer made in India
As per Offer Document –
Offer made in IFSC
88Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activities
No. Remarks
(SEBI Regulations)
First Listing on IFSC Subsequent FPOs
Exchange [Dual listed companies]
FPO on Indian FPO on IFSC FPO in both markets
Exchanges only Exchanges only
[I] [II] [III] [IV] [V]
32. Board Meeting for approving Will continue to apply Will continue to apply Will continue to Will continue to apply
allotment/transfer of Shares apply
33. Company to initiate lock in of minimum No such requirement may be SEBI ICDR Regulations Same as Column II SEBI ICDR Regulations
promoter contribution, in terms of the specified for listing on IFSC
Regulation 112 and 113 of the SEBI ICDR Exchanges While the calculation
Regulations shall be on combined
basis, the promoter
contribution and lock in
shall be in India
34. Receipt of final listing and trading approvals Receipt of final listing and Receipt of final listing Same as Column II Receipt of final listing
from the stock exchanges trading approvals from the and trading approvals and trading approvals
IFSC Exchanges from the Indian from the exchanges in
Exchanges both jurisdictions
89Direct Listing of Listed Indian Companies on IFSC Exchanges
2. Rights Issue of equity shares to be listed on Indian stock exchanges and IFSC stock exchange
Considering that all the equity shares will be pari-passu, the provisions of the Companies Act, 2013 shall apply equitably to all
shareholders, accordingly, no changes would be required in the Companies Act, 2013 from a Rights Issue perspective.
Rights Issue of equity shares will be offered to investors in both jurisdictions. In respect of Rights Issue, the following approach
may be considered:
a) Since the companies are primarily listed on Indian exchanges, the provisions of SEBI ICDR Regulations may be made
applicable for rights issue.
b) The LOF may be common in accordance with SEBI ICDR Regulations and filed by SEBI registered merchant bankers
c) The filing of documents may be made to IFSC exchanges as well (in addition to Indian exchanges)
d) In-Principle approval may be required from exchanges in both jurisdictions
e) A copy of the LOF may be filed with IFSCA as well for information
f) The proportionate fees may be paid to IFSCA
g) The REs will be required to be credited in the demat accounts of the investors in IFSC as well.
h) The pricing of the Rights Issue shall be same in both jurisdictions [conversion shall be as per exchange rates as on Record
Date]
i) The investors in IFSC will be entitled to participate in the Rights Issue. In this regard, the following process is suggested:
▪ Since the companies are primarily listed on Indian exchanges, the recognised stock exchanges in India shall be the
primary designated stock exchanges for Rights Issue process.
▪ An IFSC Exchange will also be the designated exchange for the Rights issue for investors in IFSC.
90Direct Listing of Listed Indian Companies on IFSC Exchanges
▪ The designated exchange in IFSC shall provide the information regarding application to the designated stock
exchange in India enabling participation of non-resident investors in the Rights Issue.
j) Fast Track Rights Issue: In respect of eligibility criteria for fast track rights issue provided under Regulation 99 (h) and (i)
of SEBI ICDR Regulations, the issuer shall be eligible for Rights Issue through fast track route only if there is no
corresponding action by IFSCA also (similar to SEBI).
The detailed analysis of the various provisions relating to Rights Issue is as follows:
Step No. Activity Remarks
1. Company to check if it meets the eligibility criteria for rights issue under Section 62 of the Companies Companies Act, 2013
Act and Regulations 60, 61 and 62 of the SEBI ICDR Regulations and Regulation 94 of the IFSCA ILS SEBI ICDR Regulations
Regulations.
2. In terms of Regulation 29(1)(d) of the SEBI LODR Regulations, the Company is required to give prior Intimation to stock exchanges in IFSC may
intimation to the Stock Exchanges for the board meeting in which the proposal for fund raising by way also be included
of rights issue is to be considered, at least 2 working days in advance, excluding the date intimation and
date of meeting.
3. Board resolution to be passed by the Company for approval of the rights issue under section 62(1)(a) Will continue to apply
of the Companies Act, the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended,
the Companies (Share Capital and Debentures) Rules, 2014, as amended, and the SEBI ICDR
Regulations. Intimation of outcome to Stock Exchanges to be made within 30 minutes as required under
the SEBI LODR Regulations
4. In terms of Schedule B of the SEBI PIT Regulations, and code of conduct framed thereunder, the Will continue to apply
Company shall close the trading window for designated persons.
5. Appointment of lead managers and other Intermediaries in terms of the Regulation 69 of the SEBI ICDR SEBI registered merchant bankers
Regulations and enter into agreements with the lead managers and other intermediaries.
6. Preparing a draft letter of offer (“DLOF”) in terms of Regulation 70 of the SEBI ICDR Regulations, in SEBI ICDR Regulations
terms of:
(i) disclosures specified in the Companies Act, 2013; and
91Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
(ii) disclosures specified in Part B or B-1 of Schedule VI, as applicable.
7. Board Meeting for approval of DLOF (along with similar steps for prior intimation of the meeting and Will continue to apply
intimation of outcome as set out above) in terms of the Companies Act, SEBI LODR Regulations and SEBI
ICDR Regulations
8. In terms of Regulation 71(1) of the SEBI ICDR Regulations, the Company shall file the DLOF with SEBI, SEBI ICDR Regulations
in accordance with Schedule IV of the SEBI ICDR Regulations, along with fees as specified in Schedule
III of the SEBI ICDR Regulations, through the lead manager(s). A copy of DLOF may be filed with IFSCA also
for information
Proportionate fees may be paid to IFSCA
9. In terms of Regulation 71 (3) of the SEBI ICDR Regulations, the Company shall also file the DLOF with SEBI ICDR Regulations
the stock exchange(s), and shall submit to the stock exchange(s), the Permanent Account Number, bank
account number and passport number of its promoters where they are individuals, and Permanent A copy of DLOF may be filed with IFSC
Account Number, bank account number, company registration number or equivalent and the address of Exchanges as well.
the Registrar of Companies with which the promoter is registered, where the promoter is a body
corporate.
10. In terms of Regulation 62 of the SEBI ICDR Regulations, the Company is required to file an application In-Principle approval may be required from
with the stock exchanges for obtaining in-principle approval from the stock exchanges. exchanges in both jurisdictions
11. In terms of Regulation 72 of the SEBI ICDR Regulations, the DLOF filed with SEBI shall be made public SEBI ICDR Regulations
for comments, for at least 21 days from the date of filing, by hosting it on the websites of the Company,
SEBI, stock exchanges where specified securities are proposed to be listed and lead manager(s) DLOF shall also be hosted on the websites
associated with the issue. Further, the Company shall make a public announcement disclosing the fact of the IFSC exchanges and IFSCA
of filing of DLOF to the public within 2 days of filing.
12. In terms of Regulation 71 (4) of the SEBI ICDR Regulations, SEBI may specify changes or issue SEBI ICDR Regulations
observations on the DLOF within a period of thirty days.
13. In terms of Regulation 71 (5) of the SEBI ICDR Regulations, if SEBI specifies changes or issues SEBI ICDR Regulations
observations on the DLOF, the Company and the lead manager(s) shall carry out such changes in the
92Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
DLOF and shall submit to SEBI an updated DLOF complying with the observations issued by SEBI and
highlighting all changes made in the DLOF before filing the letter of offer (“LOF”) with the stock
exchanges.
14. Board Meetings to approve the Rights Issue price and subsequently the Record Date, entitlement ratio Will continue to apply
and LOF (along with similar steps for prior intimation of the meetings and intimation of outcome as set
out above).
15. In terms of Regulation 71 of the SEBI ICDR Regulations, post incorporation of changes suggested in the SEBI ICDR Regulations
DLOF, the Company is required to file copy of the LOF with SEBI and the stock exchanges through the
lead manager(s) simultaneously with filing of the LOF with the designated stock exchange. A copy of the LOF may be filed with IFSC
Exchanges and IFSCA as well
16. In terms of Regulation 71 of the SEBI ICDR Regulations, the lead manager(s) shall submit the following SEBI ICDR Regulations
documents to SEBI after issuance of observations by SEBI or after expiry of the period stipulated in
Regulation 71(4) if SEBI has not issued observations:
a) a statement certifying that all changes, suggestions and observations made by SEBI have been
incorporated in the offer document;
b) a due diligence certificate as per Form C of Schedule V, at the time of filing of the LOF;
c) a due diligence certificate as per Form D of Schedule V, in the event the Company has made a
disclosure of any material development by issuing a public notice.
17. In terms of Regulation 84 of the SEBI ICDR Regulations, the Company shall, after filing the LOF, make an SEBI ICDR Regulations
advertisement in one English national daily newspaper with wide circulation, Hindi national daily
newspaper with wide circulation and one regional language newspaper with wide circulation at the No separate advertisement may be
place where the registered office of the Company is situated, and also give an intimation to the stock mandated in IFSC
exchanges for dissemination on their websites], at least 2 days before the date of opening of the issue,
disclosing, inter alia, the following:
• date of completion of despatch of abridged letter of offer and the application form
• centres other than registered office where duplicate copies of the application form may be
obtained
18. In terms of Regulation 77A of the SEBI ICDR Regulations, the rights entitlements shall be credited to the SEBI ICDR Regulations
demat account of the shareholders before the date of opening of the issue
93Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
The REs shall also be credited to the demat
accounts of the investors in IFSC also.
19. In terms of Regulation 85 of the SEBI ICDR Regulations, the rights issue may be opened within 12 SEBI ICDR Regulations
months from the date of issuance of observations by SEBI.
Since the companies are primarily listed on
Indian exchanges, the recognised stock
exchanges in India will be the primary
designated stock exchanges for Rights Issue
process.
An IFSC Exchange will also be the
designated exchange for the Rights issue
for investors in IFSC.
The designated exchange in IFSC will
provide the information regarding
application to the designated stock
exchange in India enabling participation of
non-resident investors in the Rights Issue.
The designated stock exchanges in both
jurisdictions shall closely coordinate to
facilitate rights issue process in both
jurisdictions.
20. In terms of Regulation 87 of the SEBI ICDR Regulations, the rights issue shall be kept open for SEBI ICDR Regulations
subscription between 7-30 days.
21. In terms of Regulation 84 of the SEBI ICDR Regulations, an announcement regarding closure of issue SEBI ICDR Regulations
shall be made only after the lead manager(s) is satisfied that at least 90% of the offer through LOF has
been subscribed and a certificate has been obtained to that effect from the registrar to the issue 90% may be computed on combined basis
94Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
22. In terms of Regulation 81 of the SEBI ICDR Regulations, if the Company desires to have the rights issue SEBI ICDR Regulations – [Underwriting to
underwritten, it shall appoint merchant bankers or stock brokers, registered with SEBI, to act as the extent of Rights Issue in India]
underwriters. However, the issue can be underwritten only to the extent of entitlement of shareholders
other than the promoters and promoter group. Underwriting, if any, in the IFSC may be
disclosed in the Offer Document
23. Finalisation of Basis of Allotment SEBI ICDR Regulations
24. Basis of Allotment to be approved by the Stock Exchange SEBI ICDR Regulations
Basis of allotment to be approved by Indian
stock exchanges
25. Board Meeting for approving allotment/transfer of Shares and filing of PAS-3 form Will continue to apply
26. In terms of Regulation 92 of the SEBI ICDR Regulations, the lead manager(s) shall ensure that a post- SEBI ICDR Regulations
issue advertisement with stipulated details in relation to subscription, value and percentage of
successful allottees, etc., is released within 10 days from the date of completion of the various activities
in at least one English national daily newspaper with wide circulation, one Hindi national daily
newspaper with wide circulation and one regional language daily newspaper with wide circulation.
These details shall also be placed on websites of Stock Exchanges
27. Eligibility conditions for Fast Track Rights Issue Will continue to apply
However, as regards (h) and (i), the issuer
shall be eligible for fast-track Rights Issue
only if there is no corresponding action by
IFSCA (similar to SEBI).
28. Take post allotment approval from the stock exchanges and also ensure Minimum public shareholding Will continue to apply
is complied with
Approval from stock exchanges in both
jurisdictions may be required.
95Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
MPS compliance to be ensured.
29. Receipt of Filing for the listing and trading approval from the stock exchanges Approval from stock exchanges in both
jurisdictions may be required.
30. In terms of Regulation 32 of the SEBI LODR Regulations, the Company is required to: Disclosures under SEBI LODR Regulations
• submit to the Stock Exchanges, the quarterly statement indicating deviations, if any, in the use In respect of dual listed companies, all
of proceeds from the objects stated in the offer document or explanatory statement to the notice disclosures made on Indian stock
for the general meeting, as applicable, and category wise variation between projected utilisation exchanges shall be disclosed on IFSC
of funds made by it therein and the actual utilisation of funds. Exchanges through appropriate
• where it has appointed a monitoring agency: agreements/ arrangements between
o submit the agency’s report within 45 days from end of each quarter to the Stock exchanges.
Exchanges.
o place such report before the audit committee on quarterly basis
3. Preferential Issue of equity shares to be listed on Indian stock exchanges and IFSC stock exchange
Considering that all the equity shares will be pari-passu, the provisions of the Companies Act, 2013 shall apply equitably to all
shareholders, accordingly, no changes would be required in the Companies Act, 2013 from a Preferential Issue perspective.
In respect of preferential Issue, the following approach may be considered:
a) Since the companies are primarily listed on Indian exchanges, the provisions of SEBI ICDR Regulations may be made
applicable for preferential issue.
b) The equity shares pursuant to preferential allotment may be listed in either IFSC or India. In respect of listing on IFSC
exchanges, the in-principle and trading approval will be required from exchanges in IFSC. However, the IFSC exchange shall
seek NOC from Indian exchanges prior to granting in-principle approval; and vice versa in case of listing on Indian exchanges.
96Direct Listing of Listed Indian Companies on IFSC Exchanges
c) As regards pricing, the VWAP shall also take into account trading on IFSC exchanges.
d) In case of preferential allotment in both jurisdictions, the listing shall be simultaneous (same date) in both jurisdictions.
The detailed analysis of the various provisions relating to Preferential Issue is as follows:
Step No. Activity Remarks
1. In terms Regulation 161 of SEBI ICDR Regulation, determination of the “Relevant Date” for the purposes SEBI ICDR Regulations
of determining the price at which the equity shares shall be issued and allotted to the investor in
accordance with the SEBI ICDR Regulations. 40
2. In terms Regulation 159 of SEBI ICDR Regulation, preferential issue of specified securities shall not be SEBI ICDR Regulations
made to any person who has sold or transferred any equity shares of the Company during the 90 trading
days preceding the relevant date.
3. Check the eligibility criteria mentioned under Regulations 158, 159 and 160 of the SEBI ICDR SEBI ICDR Regulations
Regulations.
4. Company to notify the stock exchanges under Regulation 29(1)(d) of the SEBI LODR Regulations in Disclosures under SEBI LODR
relation to the meeting of its Board to be held to consider the preferential issuance. Regulations
In respect of dual listed companies, all
disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
5. As per regulation 166A(2) of SEBI ICDR Regulations, Any preferential issue, which may result in a change SEBI ICDR Regulations
in control of the issuer, shall only be made pursuant to a reasoned recommendation from a committee of
independent directors of the issuer after considering all the aspects relating to the preferential issue
including pricing, and the voting pattern meeting of shareholders.
40 The relevant date in case of preferential issue of equity shares is required to be the date 30 (thirty) days prior to the date on which the meeting of the shareholders is held to consider the preferential issue.
Where the relevant date falls on a weekend/holiday, the day preceding the weekend/holiday will be reckoned to be the relevant date.
97Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
6. Tenure of the convertible securities shall be in lines with regulations 162(1) of SEBI ICDR Regulations SEBI ICDR Regulations
7. Pre as well as Post allotment the company shall be in compliance with the requirements of Minimum SEBI ICDR Regulations
Public Shareholding
MPS compliance to be ensured.
8. Board meeting of the Company (“Board Meeting”) to be convened to: Will continue to apply
(a) approve the preferential issue, subject to approval of the shareholders of the Company;
(b) approve the draft of the subscription agreement between the Company and the Investor (if any)
(“Agreement”) and authorising the relevant person(s) to sign the Agreement;
(c) take on record a certificate from a registered valuer setting out the valuation of the equity shares
(applicable if –
- the preferential issuance results in allotment of more than 5% of the post issue fully diluted share
capital of the Company)
- Articles of association of the company demands for the same,
- the consideration is other than cash i.e. Swap of shares.
(d) take on record the computation of 90 trading days/10 trading days volume weighted average price;
(e) take on record a practicing company secretary certificate certifying that the preferential issue is in
accordance with the SEBI ICDR Regulations;
(f) appoint a Monitoring Agency, if applicable, for monitoring the use of proceeds from the issue subject
to the preferential issue being approved at the extraordinary general meeting of the Company (“EGM”);
and
(g) convene an EGM to seek approval of shareholders of the Company for the preferential issue and
approve the notice convening the EGM of the Company to be dispatched to shareholders of the Company.
9. In terms Regulation 166A and 166A(2) of SEBI ICDR Regulations read with Exchange Circular No. SEBI ICDR Regulations
NSE/CML/2022/56 dated December 13, 2022, the valuation report for the valuation of the equity
98Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
shares to be uploaded on the website of the Company and reference of this to be made in the notice
convening the EGM, if applicable.
10. Outcome of the Board Meeting to be disclosed to the stock exchanges within 30 minutes from the In respect of dual listed companies, all
end of the Board Meeting. disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
11. In terms Regulation 163 of SEBI ICDR Regulations, the Company to prepare and complete the dispatch of Email / Letters of notice of the EGM to be
email/letters of notice of the EGM to its shareholders and make relevant disclosures to the stock sent to investors in IFSC as well
exchanges under Regulation 30 of the SEBI LODR Regulations.
In respect of dual listed companies, all
disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
12. In terms Regulation 164 of SEBI ICDR Regulations, if the equity shares of the Company have been listed As regards pricing, the VWAP shall also
on a recognised stock exchange for a period of or more as on the relevant date, the price of the equity take into account trading on IFSC
shares to be allotted pursuant to the preferential issue shall be not less than higher of the following: exchanges
a. the 90 trading days volume weighted average price of the related equity shares quoted on the
recognised stock exchange preceding the relevant date; or
b. the 10 trading days’ volume weighted average prices of the related equity shares quoted on a
recognised stock exchange preceding the relevant date.
In case of scenarios described in regulation 164, 164A, 165, 166 and 166A, the price of the equity shares
to be allotted pursuant to the preferential issue shall be in accordance with the said regulations.
99Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
13. Entire pre-preferential allotment shareholding of the allottees shall be subject to lock-in, in lines with The lock-in may be made applicable on all
regulation 167(6) of SEBI ICDR Regulations. investors (including IFSC) on same lines
provided under SEBI ICDR Regulations.
In case of pre-preferential allotment shareholding of the allottees is pledged, compliance with regulation
164A of SEBI ICDR Regulations
14. Company to file applications in the prescribed format to obtain the in-principle approval of the stock The equity shares pursuant to
exchanges for the preferential issue. preferential allotment may be listed in
either IFSC or India. In respect of listing
on IFSC exchanges, the in-principle and
trading approval will be required from
exchanges in IFSC. However, the IFSC
exchange shall seek NOC from Indian
exchanges prior to granting in-principle
approval; and vice versa in case of listing
on Indian exchanges
15. EGM to be held pursuant to which the shareholders of the Company will approve the preferential issue Will continue to apply
by way of a special resolution.
16. The Company to file Form MGT-14 with the relevant Registrar of Companies in relation to the approval Will continue to apply
of the shareholders of the Company for the issuance of the equity shares.
17. The Company to circulate private placement offer letter in Form PAS-4 to the Investor and maintaining a Will continue to apply
record of the same in Form PAS-5.
18. Payment of consideration for the preferential issue from the respective allotees bank account to the Will continue to apply
designated bank account opened/designated for the preferential issue.
Compliance with regulation 169 with respect to receipt of consideration.
19. The Company to convene a meeting of the Board/ committee of the Board to allot the equity shares to Will continue to apply
the Investor and issue a letter of allotment to the Investor confirming the allotment of the equity shares.
100Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
In terms of Regulation 169(5) of the SEBI ICDR Regulations, Company to take on record the certificate to
be issued by the statutory auditors to the stock exchanges (stating that the Company is in compliance
with certain requirements of the SEBI ICDR Regulations.
Delivery of intimation to the stock exchanges regarding the Closing Board Meeting – as an update to the
Regulation 30 Disclosure filed in relation to the Board Meeting at S. No. 4.
20. Allotment of securities shall be in compliance with regulation 152(2) and 170. SEBI ICDR Regulations
21. Post allotment the company shall be in compliance with the requirements of Minimum Public MPS compliance to be ensured
Shareholding
22. Investor to make requisite disclosures under the SEBI (Substantial Acquisition of Shares and -
Takeovers) Regulations, 2011, if required.
23. Company to file applications in the prescribed format to obtain the in-principle listing approval of the The equity shares pursuant to
stock exchanges for the preferential issue. preferential allotment may be listed in
either IFSC or India. In respect of listing
on IFSC exchanges, the in-principle and
trading approval will be required from
exchanges in IFSC. However, the IFSC
exchange shall seek NOC from Indian
exchanges prior to granting in-principle
approval; and vice versa in case of listing
on Indian exchanges
24. Company to deliver instructions to the depository and/or any other relevant authority for credit of the The instructions to the IFSC depository
equity shares. The equity shares can be credited to the demat account of the Investor once the ISIN (if may be given for crediting equity shares in
required to be generated) is in place. the demat account of investors in IFSC
The securities so credited shall be subject to lock-in in lines with regulation 167 of SEBI ICDR
Regulations,2018. Lock-in may apply in accordance with
SEBI ICDR Regulations
101Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
25. Company to file applications in the prescribed format to obtain the Trading approval / Final Listing Same as above
Approval of the stock exchanges for the preferential issue.
26. Company to file with the relevant Registrar of Companies Form PAS-3 regarding the allotment of the Will continue to apply
equity shares within a period of fifteen days from the date of passing of special resolution.
27. Company to file Form FC-GPR, if applicable Will continue to apply
4. Dividend Distribution
Considering that all the equity shares will be pari-passu, the provisions of the Companies Act, 2013 shall apply equitably to all
shareholders, accordingly, no changes would be required in the Companies Act, 2013 from a dividend distribution perspective.
The detailed analysis of the various provisions relating to dividend distribution is as follows:
Step No. Activity Remarks
1. Company to check if it meets the eligibility criteria for payment of dividend under Section 123 of the Will continue to apply
Companies Act, 2013, as amended (“Companies Act”), and Rule 3 of the Companies (Declaration and
Payment of Dividend) Rules, 2014, as amended (“Dividend Rules”).
2. In terms of Regulation 29(1)(e) of the SEBI LODR Regulations, as amended, and Regulation 134 of the Disclosures under SEBI LODR
IFSCA ILS Regulations, as amended, the Company is required to give prior intimation to the Indian and Regulations
IFSC Stock Exchanges for the board meeting in which declaration/ recommendation of dividend is to be
considered, at least 2 working days in advance, excluding the date intimation and date of meeting. In respect of dual listed companies, all
disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
3. In terms of Schedule B of the SEBI PIT Regulations, as amended, and code of conduct framed thereunder, Will continue to apply
the Company shall close the trading window for designated persons.
102Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
4. In terms of Regulation 42 of the SEBI LODR Regulations, the prior intimation specified in Step 2 above Will continue to apply
shall also contain details of record date fixed for the purpose of declaration of dividend.
5. Board meeting to fix record date, recommend and declare dividend. Will continue to apply
Such recommendation/declaration shall be at least 5 working days
(excluding the date of intimation and the record date) prior to the record date, in terms of Regulation
42(3) of the SEBI LODR Regulations.
6. In terms of Regulation 30 and Part A of Schedule III of the SEBI LODR Regulations and Regulation 134 of Disclosures under SEBI LODR
the IFSCA ILS Regulations, the Company is required to disclose the outcome of the Board Meeting in Regulations
which dividend is declared or recommended or any dividend is passed and the date on which dividend
shall be paid/dispatched is considered, within 30 minutes of closure of such meeting, to the Indian and In respect of dual listed companies, all
IFSC Stock Exchanges. disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
7. Book Closure: In terms of Regulation 42(2) of the SEBI LODR Regulations, the Company shall give notice Disclosures under SEBI LODR
in advance of at least 7 working days (excluding the date of intimation and the record date) to Stock Regulations
Exchanges of record date specifying the purpose of the record date.
In respect of dual listed companies, all
Further, such book closure shall be required to be advertised at least once in a vernacular newspaper in disclosures made on Indian stock
the principal vernacular language of the district and having a wide circulation in the place where the exchanges shall be disclosed on IFSC
registered office of the Company is situated, and at least once in English language in an English Exchanges through appropriate
newspaper circulating in that district and having wide circulation in the place where the registered office agreements/ arrangements between
of the Company is situated and publish the notice on the website as may be notified by the Central exchanges.
Government and on the website, if any, of the Company, in terms of Section 91 of the Companies Act and
SEBI LODR Regulations. No separate advertisement may be
mandated in IFSC
8. AGM to approve and declare dividend Will continue to apply
103Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
9. In terms of Regulation 44(3) of the SEBI LODR Regulations, the Company shall submit the details of the IFSC shareholders are eligible to vote. E-
voting results within two working days from the conclusion of the AGM to the Stock Exchanges. voting facility may be provided
As regards Disclosures under SEBI LODR
Regulations, same comments as above.
10. In terms of Section 123 of the Companies Act, the Company is required to open a separate bank account Will continue to apply
in a Scheduled Bank for payment of dividend and deposit the total amount of dividend in this account.
11. In terms of Regulation 12 of the SEBI LODR Regulations and Section 127 of the Companies Act, the Payment to shareholders in IFSC shall be
Company shall make payment of dividend by way of cheque or warrant or in any electronic mode of cross jurisdiction (under FEMA).
payment facility approved by the RBI, to the shareholder entitled to receive the dividend within 30 days Therefore, such payments shall be only in
from the date of declaration of dividend electronic mode.
12. In terms of Sections 124 and 125 of the Companies Act, if dividend has been declared but not been paid Will continue to apply
or claimed within 30 days from the date of the declaration to any eligible shareholder, the Company shall,
within 7 days thereafter, transfer the total amount of dividend which remains unpaid or unclaimed to the
Unpaid Dividend Account.
Any such amount which remains unpaid or unclaimed for a period of seven years from the date of such
transfer shall be transferred by the Company along with interest accrued, if any, thereon to the Investor
Education and Protection Fund.
5. Bonus Issue of equity shares to be listed on Indian stock exchanges and IFSC stock exchange
Considering that all the equity shares will be pari-passu, the provisions of the Companies Act, 2013 shall apply equitably to all
shareholders, accordingly, no changes would be required in the Companies Act, 2013 from a Bonus Issue perspective.
The detailed analysis of the various provisions relating to bonus issue of equity shares is as follows:
104Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
1. Company to check if it meets the eligibility criteria for bonus issuance under Section 63 of the Companies Companies Act, 2013
Act and Regulation 293 of the SEBI ICDR Regulations, as amended.
Since the companies are primarily listed
on Indian exchanges, the same eligibility
criteria provided under SEBI ICDR
Regulations may be made applicable for
bonus issuances.
2. In terms of Regulation 29(1)(f) of the SEBI LODR Regulations, the Company is required to give prior Disclosures under SEBI LODR
intimation to the Stock Exchanges for the board meeting in which the proposal for declaration of bonus Regulations
securities is to be considered, at least 2 working days in advance, excluding the date intimation and date
of meeting. In respect of dual listed companies, all
disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
3. In terms of Schedule B of the SEBI PIT Regulations, and code of conduct framed thereunder, the Company Will continue to apply
shall close the trading window for designated persons.
4. In terms of Regulation 42 of the SEBI LODR Regulations, the prior intimation specified in Step 2 above Disclosures under SEBI LODR Regulations
shall also contain details of record date fixed for the purpose of bonus issue. [Same comment as above]
5. Board meeting to fix record date and to approve bonus issue. Will continue to apply
6. In terms of Regulation 30 and Part A of Schedule III of the SEBI LODR Regulations, the Company is Disclosures under SEBI LODR Regulations
required to disclose the outcome of the Board Meeting in which the proposal for bonus issue, including [Same comment as above]
the date on which such bonus shares shall be credited/dispatched, is considered, within 30 minutes of
closure of such meeting, to the Indian and IFSC Stock Exchanges.
7. Book Closure: In terms of Regulation 42(2) of the SEBI LODR Regulations, the Company shall give notice Disclosures under SEBI LODR Regulations
in advance of at least 7 working days (excluding the date of intimation and the record date) to Stock [Same comment as above]
Exchanges of record date specifying the purpose of the record date.
Further, such book closure shall be required to be advertised at least once in a vernacular newspaper in
the principal vernacular language of the district and having a wide circulation in the place where the
registered office of the Company is situated, and at least once in English language in an English
105Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
newspaper circulating in that district and having wide circulation in the place where the registered office
of the Company is situated and publish the notice on the website as may be notified by the Central
Government and on the website, if any, of the Company, in terms of Section 91 of the Companies Act and
SEBI LODR Regulations.
8. AGM/EGM to approve and declare bonus issue Will continue to apply
9. In terms of Regulation 44(3) of the SEBI LODR Regulations, the Company shall submit the details of the Disclosures under SEBI LODR Regulations
voting results within two working days from the conclusion of the AGM/EGM to the Stock Exchanges. [Same comment as above]
10. Board meeting for allotment of bonus shares (which shall be made only in demat form in terms of Will continue to apply
Regulation 294(6) of the SEBI ICDR Regulations)
11. Filing of PAS-3 form for allotment of bonus shares within 30 days from date of the Board resolution for Will continue to apply
allotment in terms of Section 39 of the Companies Act and Rule 12 of the Companies (Prospectus and
Allotment of Securities) Rules, 2014
12. The Company is required to implement the bonus issue within 15 days from Board approval, where Will continue to apply
shareholders’ approval is not required for capitalisation of profits or reserves for making the bonus issue;
else it has to be implemented within 2 months from the date of the Board approval, where such approval
is required from shareholders, in terms of Regulation 295 of the SEBI LODR Regulations.
6. Open Offer to all the equity shareholders of the Company
An open offer process is the course of action that requires the acquirer to make an open offer to the existing shareholders of the
target to accomplish a takeover in accordance with the SEBI SAST Regulations. Please note that the steps set out below are solely
for a direct open offer and does not contemplate other scenarios including competing offer, indirect open offer etc.
Open offer will be required to be offered to investors in both jurisdictions. In respect of open offers, the following approach may be
considered:
a) Since the companies are primarily listed on Indian exchanges, the provisions of SEBI SAST Regulations may be made
applicable for open offers.
106Direct Listing of Listed Indian Companies on IFSC Exchanges
b) The LOF may be common in accordance with the SEBI SAST Regulations and filed by SEBI registered merchant bankers
c) The filing of documents may be made to IFSC exchanges as well (in addition to Indian exchanges)
d) A copy of the Public Announcement, DPS, DLOF, LOF and other relevant documents may be filed with IFSCA and IFSC
Exchanges also
e) The proportionate fees may be paid to IFSCA
f) The pricing of the Open Offer shall be same in both jurisdictions [conversion shall be as per exchange rates as on Record
Date]
g) As regards calculation of pricing for open offers, the VWAP shall also take into account trading on IFSC exchanges
h) The investors in IFSC will be entitled to participate in the Open Offer. In this regard, the following process is suggested:
▪ Since the companies are primarily listed on Indian exchanges, the recognised stock exchanges in India shall be the
primary designated stock exchanges for tendering in Open Offers.
▪ An IFSC Exchange will also be the designated exchange for facilitating tendering in the open offers by investors in
IFSC.
▪ The designated exchange in IFSC shall provide the information regarding tendering to the designated stock exchange
in India enabling participation of non-resident investors in the Open Offers.
▪ A depository account may be opened in IFSC as well. The investors in IFSC participating in the open offer shall
transfer the shares to this depository account in IFSC first and subsequently the accepted shares may be transferred
to the depository account in India.
▪ A separate special escrow account may be opened by the Acquirer in IFSC as well to facilitate payments to investors
in IFSC.
107Direct Listing of Listed Indian Companies on IFSC Exchanges
The detailed analysis of the various provisions relating to Open Offers is as follows:
Step No. Activity Remarks
1. Appointment of Merchant Banker [Regulation 12(1) of Takeover Regulations] SEBI SAST Regulations
The first and foremost obligation of an Acquiring company with the PAC (Persons acting in concert) is to SEBI registered merchant banker
appoint a Merchant banker who would look after the shares tendered in the open offer. This has to be
made before the making of a public announcement. The merchant banker assumes all responsibility
associated with the transaction. The merchant banker in no way should be related to the acquirer as well
as with the Company.
2. Opening of a depository account for tendered shares A depository account may be opened in
IFSC as well. The investors in IFSC
This can be done before or on the day of the public announcement. The Depository account acts as a bank participating in the open offer shall
and holds the securities in de-materialised or electronic form. In this case, the securities are the shares transfer the shares to this depository
that the acquiring company might obtain through the open offer process. account in IFSC first and subsequently the
accepted shares may be transferred to the
depository account in India.
3. Computation of Offer Price [Regulation 8(2) of Takeover Regulations] As regards calculation of pricing for open
offers, the VWAP shall also take into
In the case of direct acquisition of shares or voting rights in, or control over the Company, and indirect account trading on IFSC exchanges.
acquisition of shares or voting rights in, or control over the Company where the parameters referred to
in sub-regulation (2) of regulation 5 of the Takeover Regulations are met, the offer price shall be the
highest of,—
(a) the highest negotiated price per share of the Company for any acquisition under the agreement
attracting the obligation to make a public announcement of an open offer;
(b) the volume-weighted average price paid or payable for acquisitions, whether by the acquirer or by
any person acting in concert with him, during the fifty-two weeks immediately preceding the date of
the public announcement;
108Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
(c) the highest price paid or payable for any acquisition, whether by the acquirer or by any person
acting in concert with him, during the twenty-six weeks immediately preceding the date of the public
announcement;
(d) the volume-weighted average market price of such shares for a period of sixty trading days
immediately preceding the date of the public announcement as traded on the stock exchange where the
maximum volume of trading in the shares of the Company are recorded during such period, provided
such shares are frequently traded;
4. Public Announcement [Regulation 13 of Takeover Regulations] SEBI SAST Regulations
The public announcement is the first announcement made by the acquirer disclosing the details of the
transaction and the intention to acquire the shares of the Company by the means of an open offer.
The Public announcement has to be made on the date of agreeing to acquire the shares or voting rights
or the control over the Company.
5. Contents of public announcement [Regulation 15 of Takeover Regulations] SEBI SAST Regulations
The public announcement should contains basic information like:
1. Identity of the PAC.
2. Nature of the proposed acquisition.
3. Consideration and price per share, and mode of payment of consideration.
4. Offer price and minimum level of acceptance if mentioned by an acquirer.
6. Submission of the Public Announcement: [Regulation 14 (1) & 14 (2) of Takeover Regulations] SEBI SAST Regulations
The Public Announcement that had been made has to be sent to: A copy of the Public Announcement may
1. The Stock Exchanges. also be required to be filed with IFSCA and
2. SEBI, through the merchant banker. the IFSC Exchanges as well.
3. The Company at their registered office.
Within one working day of the public announcement.
7. Opening of an escrow account (Regulation 17 of Takeover Regulations) SEBI SAST Regulations
109Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
The Acquirer along with the PAC must open an escrow account, at least 2 days before making the public
statement. An amount equal to 25% of the consideration payable has to be deposited for the first ₹500
crores and an additional 10% for any amount over ₹500 crores in the escrow account. Such amount can
be kept in the form of cash, bank guarantee, or deposit of freely and frequently traded shares. The bank
guarantee will be in favour of the manager to the open offer and he/she will have the power to sell the
shares to manage the payment of consideration. A minimum of 1% of the consideration has to be kept in
the form of cash with any scheduled commercial bank which the manager to the open offer would use to
make payments out of.
An Escrow Account acts as a security deposit for the Acquiring company with its PAC and a guarantee
towards the shareholders of the Company in case of non-compliance or withdrawal on the part of
Acquiring company. In case of forfeiture or non-compliance to the obligations under the takeover code
after the deduction of expenses,1/3rd of the amount would be moved to the Company, 1/3rd will go to
the IEPF and 1/3rd will be distributed pro-rata among the shareholders who have accepted the offer.
The escrow cannot be released 30 days before the completion of the payment to shareholders who have
accepted the offer. In case of withdrawal, the money would be returned to the Acquirer. Upon payment of
all the considerations, the money would be returned to the acquirer within 30 days
8. Detailed Public Statement (DPS) [Regulation 16(1) of the Takeover Regulations] SEBI SAST Regulations
The DPS has to be made within 5 days of the Public Announcement disclosing all the relevant information No separate advertisement may be
to the Open Offer enabling the shareholders to make an informed decision about the order. The detailed mandated in IFSC
public statement has to be published in English, Hindi, and regional language daily with wide circulation
where the registered office of the Company is situated and in a regional language daily in the place where
the stock exchange having maximum trading of the Company’s share in the preceding 60 days.
9. Detailed Public Statement (DPS) [Regulation 14(4) of the Takeover Regulations] A copy of the DPS may also be required to
be filed with IFSCA and the IFSC
Simultaneously with publication of such detailed public statement in the newspapers, a copy of the same Exchanges as well.
shall be sent to, -
(i) SEBI through the manager to the open offer,
(ii) all the stock exchanges on which the shares of the Company are listed, and the stock exchanges shall
forthwith disseminate such information to the public,
110Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
(iii) the Company at its registered office, and the Company shall forthwith circulate it to the members of
its board.
10. Recommendations by the Board [Regulation 26 (6) of the Takeover Regulations] SEBI SAST Regulations
Upon receipt of the DPS, the board of directors of the Company shall constitute a committee of
independent directors to provide reasoned recommendations on such open offer, and the Company shall
publish such recommendations:
Provided that such committee shall be entitled to seek external professional advice at the expense of the
Company.
Provided further that while providing reasoned recommendations on the open offer proposal, the
committee shall disclose the voting pattern of the meeting in which the open offer proposal was
discussed.
11. [Regulation 26 (7) of the Takeover Regulations] SEBI SAST Regulations
The committee of independent directors shall provide its written reasoned recommendations on the A copy of the recommendation of the
open offer to the shareholders of the Company and such recommendations shall be published in such Committee of Independent Directors may
form as may be specified, at least two working days before the commencement of the tendering period, also be required to be filed with IFSCA and
in the same newspapers where the public announcement of the open offer was published, and the IFSC Exchanges as well.
simultaneously, a copy of the same shall be sent to,—
(i) SEBI;
(ii) all the stock exchanges on which the shares of the Company are listed, and the stock exchanges shall
forthwith disseminate such information to the public; and
12. Filing of draft Letter of Open Offer (LOF) [Regulation 16(1) of Takeover Regulations] SEBI SAST Regulations
Within 5 working days from the date of the detailed public statement, due diligence certificate along with A copy of the DLOF may be filed with
the non-refundable fee, a draft Letter of Open Offer (LOF) has to be filed with SEBI, and on the same IFSCA as well
day, the LOO has to be sent to the Company and the custodian of shares if any of the Company.
The open offer draft letter contains:
1. Identity of the PAC
111Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
2. Nature of the proposed acquisition
3. Consideration and price per share
4. Offer price and mode of payment of consideration
5. Minimum level of acceptance if mentioned by the acquirer
13. Simultaneously with the filing of the draft letter of offer with SEBI the acquirer shall send a copy of the SEBI SAST Regulations
draft letter of offer to the Company at its registered office address and to all stock exchanges where the
shares of the Company are listed A copy of the DLOF may be filed with IFSC
Exchanges as well.
14. Within 15 days the SEBI has to submit a receipt on the open offer. If no comments have been made by SEBI SAST Regulations
SEBI on the draft it would be assumed that SEBI has no comments.
15. Comments from SEBI [Regulation 16(4) of Takeover Regulations] SEBI SAST Regulations
Within 7 working days of the receipt of the SEBI comments on the open offer, the final open offer has to
be given to the shareholders to decide on the front of what they want to do. If no comments are received
not later than 15 days, it has to be deemed that SEBI has no comments.
16. Advertisements [Regulation 18(7) of Takeover Regulations] have to be given 1 day preceding the SEBI SAST Regulations
commencement of the tendering period which should consist of the scheduled activities for the Open
Offer, status of the approvals, and procedure for tendering acceptance. Such advertisement has to be No separate advertisement may be
published in the same newspaper where the detailed public statement was published. mandated in IFSC
17. Commencement of tendering period [Regulation 18(8) of Takeover Regulations] Since the companies are primarily listed
on Indian exchanges, the recognised stock
As the name suggests during the tendering period the shareholders who want to accept the offer can exchanges in India shall be the primary
tender their shares in the open offer. The tendering period has to commence within 12 days from the designated stock exchanges for tendering
receipt of the comments from the board and SEBI on the draft letter offer. in Open Offers.
An IFSC Exchange will also be the
designated exchange for facilitating
tendering in the open offers by investors
in IFSC.
112Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
The designated exchange in IFSC shall
provide the information regarding
tendering to the designated stock
exchange in India enabling participation
of non-resident investors in the Open
Offers.
18. Cessation of Tendering Period [Regulation 18(8) of Takeover Regulations] SEBI SAST Regulations
The tendering period has to be kept open for a period of 10 working days.
19. Post-offer Advertisement [Regulation 18(12) of Takeover Regulations] SEBI SAST Regulations.
The acquirer has to issue a post-offer advertisement within 5 working days after the offer stating the A copy of the post-offer advertisement
number of shares tendered, accepted, and their dates of consideration. may be filed with IFSCA and IFSC
exchanges as well.
The advertisement has to be published in the newspaper or media where the DPS (Detailed Public
Statement) was published and simultaneously sent to SEBI, all the stock exchanges on which the shares
of the Company are listed, and the Company at its registered office
20. Opening of Special Escrow Account [Regulation 21(1) of Takeover Regulations] SEBI SAST Regulations
For the payment of the amount to the shareholders, a special escrow account has to be opened by the A separate special escrow account may be
acquirer. opened by the Acquirer in IFSC as well to
facilitate payments to investors in IFSC.
Acquirer has to deposit the requisite amount and make the entire sum due and payable to the
shareholders and empower the manager to the open offer to operate the special escrow account.
The payment of consideration can be in the form of cash, exchange, or transfer of securities and has to be
completed within ten (10) working days of the expiry of tendering period.
21. Release of Escrow Funds [Regulation 17(10)(d) of Takeover Regulations] SEBI SAST Regulations
113Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
The merchant banker will release the remaining escrow fund and the amount in the escrow account
would be returned to the acquirer within 30 days from the payment of the consideration.
7. Buy-back of equity shares listed on Indian stock exchanges and IFSC stock exchange
Considering that all the equity shares will be pari-passu, the provisions of the Companies Act, 2013 shall apply equitably to all
shareholders, accordingly, no changes would be required in the Companies Act, 2013 from a Buy-back perspective.
A. Buy-back through tender offer route
Buy-back offers will be required to be made to investors in both jurisdictions. In respect of buy-back offers through tender offer,
the following approach may be considered:
a) Since the companies are primarily listed on Indian exchanges, the provisions of SEBI Buy-back Regulations may be made
applicable for buy-back offers.
b) The LOF may be common in accordance with SEBI Buy-Back Regulations and filed by SEBI registered merchant bankers
c) The filing of documents may be made to IFSC exchanges as well (in addition to Indian exchanges)
d) A copy of the DLOF, LOF and other relevant documents may be filed with IFSCA and IFSC Exchanges also
e) The proportionate fees may be paid to IFSCA
f) The pricing of the Buyback Offer shall be same in both jurisdictions [conversion shall be as per exchange rates as on Record
Date]
g) The investors in IFSC will be entitled to participate in the Buy-back Offers. In this regard, the following process is suggested:
▪ Since the companies are primarily listed on Indian exchanges, the recognised stock exchanges in India shall be the
primary designated stock exchanges for tendering in buy-back Offers.
114Direct Listing of Listed Indian Companies on IFSC Exchanges
▪ An IFSC Exchange will also be the designated exchange for facilitating tendering in the buy-backs offers by investors
in IFSC.
▪ The designated exchange in IFSC shall provide the information regarding tendering to the designated stock exchange
in India enabling participation of non-resident investors in the Buy-back Offers.
▪ A depository account may be opened in IFSC. The investors in IFSC participating in the buy-back offer shall transfer
the shares to this depository account in IFSC first and subsequently this may be transferred to the depository account
in India.
▪ A special bank account in IFSC may also be considered to facilitate payments to investors in IFSC.
The detailed analysis of the various provisions relating to Buy-back Offers is as follows:
Step No. Activity Remarks
1. Company to check if it meets the eligibility criteria for buyback under Section 68 of the Companies Act, No amendment will be required under the
Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014 (“2014 Rules”) and Regulations Companies Act in this regard, given the
3, 4 and 5 of the SEBI Buy-back Regulations. pari-passu nature of the equity shares
listed and traded on IFSC exchanges, and
the provisions of the Companies Act, 2013
and the SEBI Buy-back Regulations shall
apply to all the equity shares, irrespective
of where these equity shares are listed.
Accordingly, the SEBI Buy-back
Regulations shall be required to amended
to permit participation of the equity
shareholders in IFSC in the buy-back
offers by the listed companies.
115Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
2. In terms of Regulation 29(1)(f) of the SEBI LODR Regulations, the Company is required to give prior Disclosures under SEBI LODR
intimation to the Stock Exchanges for the board meeting in which the proposal for declaration of bonus Regulations
securities is to be considered, at least 2 working days in advance, excluding the date intimation and date
of meeting. In respect of dual listed companies, all
disclosures made on Indian stock
exchanges shall be disclosed on IFSC
Exchanges through appropriate
agreements/ arrangements between
exchanges.
3. In terms of Schedule B of the SEBI PIT Regulations, and code of conduct framed thereunder, the Company Will continue to apply
shall close the trading window for designated persons.
4. In terms of Regulation 42 of the SEBI LODR Regulations, the prior intimation specified in Step 2 above Disclosures under SEBI LODR Regulations
shall also contain details of record date fixed for the purpose of buyback. [Same as above]
5. Board meeting to approve the buy-back and record date Will continue to apply
6. In terms of Regulation 30 and Part A of Schedule III of the SEBI LODR Regulations, the Company is Disclosures under SEBI LODR Regulations
required to disclose the outcome of the Board Meeting in which the proposal for buyback is considered, [Same as above]
within 30 minutes of closure of such meeting, to the Indian and IFSC Stock Exchanges.
7. In terms of Regulation 5(vii) of the SEBI Buy-back Regulations, a copy of the Board resolution is required SEBI Buy-back Regulations
to be filed with SEBI and the Stock Exchanges within 2 working days from the date of passing the
resolution. A copy of the Board Resolution may be
filed with IFSCA and IFSC Exchanges as
well.
8. Book Closure: In terms of Regulation 42(2) of the SEBI LODR Regulations, the Company shall give notice Disclosures under SEBI LODR Regulations
in advance of at least 7 working days (excluding the date of intimation and the record date) to Stock [Same as above]
Exchanges of record date specifying the purpose of the record date.
No separate advertisement may be
mandated in IFSC
116Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
Further, such book closure shall be required to be advertised at least once in a vernacular newspaper in
the principal vernacular language of the district and having a wide circulation in the place where the
registered office of the Company is situated, and at least once in English language in an English
newspaper circulating in that district and having wide circulation in the place where the registered office
of the Company is situated and publish the notice on the website as may be notified by the Central
Government and on the website, if any, of the Company, in terms of Section 91 of the Companies Act and
SEBI LODR Regulations.
9. AGM/EGM to approve and declare buyback (however, in terms of the Companies Act and SEBI Buy-back Will continue to apply
Regulations, approval of shareholders is not required if the buy-back is 10% or less of the total paid-up
equity capital and free reserves of the Company)
10. In terms of Regulation 44(3) of the SEBI LODR Regulations, the Company shall submit the details of the Disclosures under SEBI LODR Regulations
voting results within two working days from the conclusion of the AGM/EGM to the Stock Exchanges. [Same as above]
11. In terms of Regulation 5(v) of the SEBI Buy-back Regulations, a copy of the Shareholders’ resolution is SEBI Buy-back Regulations
required to be filed with SEBI and the Stock Exchanges within 7 working days from the date of passing
the resolution. A copy of the Shareholders’ resolution
may be filed with IFSCA and IFSC
Exchanges as well.
12. In terms of Regulation 7(i) and Schedule II and Regulation 9 of the SEBI Buy-back Regulations, the SEBI Buy-back Regulations
Company is required to make a public announcement within 2 working days from the date of declaration
of results of the postal ballot for special resolution/board of directors resolution in at least one English No separate advertisement may be
National Daily, one Hindi National Daily and one Regional language daily, all with wide circulation at the mandated in IFSC
place where the Registered Office of the Company is situated, and such public announcement shall
include the record date.
13. In terms of Regulation 7 of the SEBI Buy-back Regulations, the Company is required to pay the fees SEBI Buy-back Regulations
specified in Schedule V and file a copy of the public announcement in electronic mode with SEBI and
Stock Exchanges, which shall also be placed on the websites of the Company, Stock Exchanges and A copy of the public announcement may
merchant banker. be filed with IFSCA and IFSC Exchanges as
well.
117Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
Proportionate fees may be paid to IFSCA
14. In terms of Regulation 9(xi) of the SEBI Buy-back Regulations, the Company is required to deposit SEBI Buy-back Regulations
following amount in an escrow account, within 2 working days of the public announcement: (i) 25% of
the consideration, if it does not exceed INR 100 crores; or (ii) if the consideration exceeds INR 100 crores,
25% up to INR 100 crores and 10% thereafter.
15. In terms of Regulation 8 of the SEBI Buy-back Regulations and Section 68 of the Companies Act, the SEBI Buy-back Regulations
Company is required to file the following within 2 working days of the Record Date:
• a letter of offer (“LOF”), containing disclosures as specified in Schedule III of the SEBI Buy-back A copy of the LOF may be filed with IFSCA
Regulations, through a merchant banker (this is also required to be dispatched to securities as well.
holders within 2 working days from Record Date, and to be filed with the RoC in terms of Rule 17
of the 2014 Rules).
• a certificate from a merchant banker certifying compliance with the SEBI Buy-back Regulations
and that the LOF contains the information required thereunder,
• A declaration of solvency as required under Section 68(6) of the Companies Act (this is also
required to filed with the RoC in terms of Rule 17 of the 2014 Rules).
16. In terms of Regulation 9 of the SEBI Buy-back Regulations, the tender offer is required to be opened ▪ Since the companies are primarily
within 4 working days from Record Date, and shall remain open for a period of 5 working days listed on Indian exchanges, the
recognised stock exchanges in
India shall be the primary
designated stock exchanges for
tendering in buy-back Offers.
▪ An IFSC Exchange will also be the
designated exchange for
facilitating tendering in the buy-
backs offers by investors in IFSC.
▪ The designated exchange in IFSC
shall provide the information
118Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
regarding tendering to the
designated stock exchange in
India enabling participation of
non-resident investors in the Buy-
back Offers.
17. In terms of Regulation 10 of the SEBI Buy-back Regulations, the Company is required to, immediately SEBI Buy-back Regulations
after the date of closure of the offer, open a special account with a banker to an issue, and deposit therein,
such sum as would, together with 90% of the amount lying in the escrow account, make-up the entire ▪ A depository account may be
sum due and payable as consideration and for this purpose, may transfer the funds from the escrow opened in IFSC. The investors in
account. IFSC participating in the buy-back
offer shall transfer the shares to
It is also required to pay the consideration to those holders of securities whose offer has been accepted this depository account in IFSC
and return the remaining securities to the holders within 5 working days of the closure of the offer. first and subsequently this may be
transferred to the depository
account in India.
▪ A special back account in IFSC
may also be considered to
facilitate payments to investors in
IFSC.
18. In terms of Regulation 24 of the SEBI Buy-back Regulations, the Company is required to, within 2 working SEBI Buy-back Regulations
days of expiry of the buy-back period, issue a public advertisement in a national daily, inter alia, disclosing
number of securities bought, buy-back price, consequent changes in capital structure and the No separate advertisement may be
shareholding pattern before and after the buy-back. mandated in IFSC
19. In terms of Regulation 11 of the SEBI Buy-back Regulations, the Company is required to, within 15 days SEBI Buy-back Regulations
of acceptance of securities and 7 days of expiry of buy-back period, extinguish and physically destroy the
securities certificates so bought back in the presence of a registrar to an issue or the Merchant Banker A copy of the certificate may be filed with
and the secretarial auditor; and shall submit a certificate to SEBI on such compliance which is certified IFSCA also.
by the registrar, secretarial auditor and 2 directors, within 7 working days of extinguishment.
119Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
20. In terms of Regulation 9(xi) of the SEBI Buy-back Regulations, on payment of consideration to all the SEBI Buy-back Regulations
securities holders who have accepted the offer and after completion of all formalities of buy-back, the
amount, guarantee and securities in the escrow, if any, shall be released to the Company.
Further, it shall be required to maintain a register of securities in Form SH-10 so bought and other details
as required under Regulation 11 of the SEBI Buy-back Regulations and Section 68 of the Companies Act
and Rule 17 of the 2014 Rules.
21. In terms of Regulation 25 of the SEBI Buy-Back Regulations, final report in the electronic mode is required SEBI Buy-back Regulations
to be submitted by the merchant Banker to SEBI within 15 working days from the date of expiry of the
buy-back period. A copy of the report may be filed with
IFSCA as well.
22. In terms of Rule 17 of the 2014 Rules, the Company shall file the return in Form SH-11 with RoC and SEBI SEBI Buy-back Regulations
within 30 days of completion of the buy-back.
B. Buy-back from the open market (through stock exchange or book building process)
[Open market may not be required in IFSC at this stage]
Step No. Activity Remarks
1. Steps 1-11 as enlisted above in Point A, to be followed Same as Steps 1-11 above in Point A
(I) Buy-back through stock exchanges (option available till March 31, 2025)
2. In terms of Regulation 16(iv) of the SEBI Buy-back Regulations, the Company is required to appoint a Same as Steps 12-13 above in Point A
merchant banker and make a public announcement, and follow Steps 12 and 13 enlisted above
3. In terms of Regulation 17 of the SEBI Buy-back Regulations, the offer is required to be opened no later SEBI Buy-back Regulations
than 4 working days from the Record Date and to be closed within the period as specified in this
Regulation.
4. In terms of Regulation 18 of the SEBI Buy-back Regulations, the Company is required to submit the SEBI Buy-back Regulations
information regarding the securities bought-back, to the Stock Exchanges, and upload this information
on its website, on a daily basis
120Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
5. In terms of Regulation 20 of the SEBI Buy-back Regulations, the Company is required to deposit 25% of SEBI Buy-back Regulations
the amount earmarked for the buy-back in an escrow account, within 2 working days of the public
announcement.
The escrow amount may subsequently be released for making payment to the shareholders subject to at
least 2.5 % of the amount earmarked for buy-back, remaining in the escrow account at all points of time.
6. In terms of Regulation 21 of the SEBI Buy-back Regulations, the Company is required to, within the 15th SEBI Buy-back Regulations
day of the succeeding month and 7 days of expiry of buy-back period, extinguish and physically destroy
the securities certificates so bought back in the presence of a registrar to an issue or the Merchant Banker
and the secretarial auditor; and shall submit a certificate to SEBI on such compliance which is certified
by the registrar, secretarial auditor and 2 directors, within 7 working days of extinguishment.
7. In terms of Regulation 20 of the SEBI Buy-back Regulations, subject to compliance with Regulation 15 on SEBI Buy-back Regulations
utilization funds, the amount and the guarantee remaining in the escrow account, if any, shall be released
to the Company.
Further, it shall be required to maintain a register of securities in Form SH-10 so bought and other details
as required under Regulation 11 of the SEBI Buy-back Regulations and Section 68 of the Companies Act
and Rule 17 of the 2014 Rules.
8. Steps 18, 21 and 22 as enlisted above in Point A, to be followed Same as Steps 18, 21 and 22 in Point A
II. Buy-back through book-building mechanism (option available till March 31, 2025)
9. In terms of Regulation 22A(i) of the SEBI Buy-back Regulations, the Company is required to appoint a Same as Steps 12-13 above in Point A
merchant banker and make a public announcement, and follow Steps 12 and 13 enlisted above. The
public announcement shall contain the detailed methodology pertaining to intimation required to be
made prior to the opening of the buy-back offer as specified in Schedule VI of the SEBI Buy-back
Regulations
10. In terms of Regulation 22A of the SEBI Buy-back Regulations, the book building process is required to be SEBI Buy-back Regulations
commenced within 7 working days from the date of the public announcement.
121Direct Listing of Listed Indian Companies on IFSC Exchanges
Step No. Activity Remarks
11. In terms of Regulation 22B of the SEBI Buy-back Regulations, the Company shall publish the offer opening SEBI Buy-back Regulations
announcement on the date of commencement of the buy-back
12. In terms of Regulation 22E of the SEBI Buy-back Regulations, the buy-back offer shall be kept open for a SEBI Buy-back Regulations
minimum of two trading days.
13. In terms of Regulation 22C of the SEBI Buy-back Regulations, the payment of consideration to holders of SEBI Buy-back Regulations
shares or other specified securities shall be completed within a period of 5 working days from the date
of closure of the buy-back offer
14. Steps enlisted above in relation to extinguishment of securities, maintaining a register of securities, post SEBI Buy-back Regulations
issue advertisement, final report to be submitted by merchant banker and filing of Form SH-11 to be
followed
8. Scheme of arrangement under Sections 230 to 234, 66 of the Companies Act, 2013 (“Scheme”) by a company incorporated
in India which is listed on BSE, NSE and on the IFSC Stock Exchanges (the “Company”).
Considering that all the equity shares will be pari-passu, the provisions of the Companies Act, 2013 shall apply equitably to all
shareholders, accordingly, no changes would be required in the Companies Act, 2013 from a scheme of arrangement perspective.
However, NOCs may be required from IFSCA / IFSC Exchanges as well, wherever applicable.
Step Activity Remarks
Disclosures under SEBI LODR
1. The Board of Directors of Company to inform BSE and NSE, within 30 minutes of their meeting, regarding
Regulations
their approval to the Scheme.
Regulation 30(2) read with Para A of Part A of Schedule III of SEBI (Listing Obligations and Disclosure In respect of dual listed companies, all
Requirements) Regulations, 2015 (“LODR”) disclosures made on Indian stock
exchanges shall be disclosed on IFSC
122Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activity Remarks
Exchanges through appropriate
agreements/ arrangements between
exchanges.
2. Company to submit Scheme and requisite documents to BSE and NSE (collectively “stock exchanges”) A copy of such documents may also be
as per their checklists, and within prescribed timeline under the standard operating procedures issued required to be sent to IFSC Stock
by stock exchanges, for seeking no objection letter of stock exchanges under Regulation 37 of LODR read Exchanges for no-objection letters for the
with Master Circular No. SEBI/HO/CFD/POD-2/P/CIR/2023/93 dated June 20, 2023 issued by SEBI on Scheme
schemes of arrangement (“SEBI Scheme Circular”).
[IFSCA may issue a circular in this regard]
If Company has listed NCDs/ NCRPS, no objection letter of stock exchanges is also required under
Regulation 59A of LODR read with Chapter XII of SEBI Circular dated July 29, 2022 bearing no.
SSEBI/HI/DDHS_Div1/P/CIR/2022/0000000103 (“SEBI Debt Circular”).
Company to upload the Scheme and the specified documents on its website immediately upon filing with
stock exchanges.
3. Per Regulation 94(1)/94A(1) of LODR, the designated stock exchange, upon receipt of draft Scheme and IFSC Stock Exchanges may be required to
the documents prescribed by SEBI, as per Regulation 37(1)/59A of LODR, shall forward the same to SEBI, send the Scheme and requisite documents
in the manner prescribed by SEBI. to IFSCA
Pursuant to SEBI Scheme Circular and the SEBI Debt Circular, Company to choose one of the stock
exchanges as the designated stock exchange for the purpose of coordinating with SEBI.
4. Per Regulation 94(2)/94A(2) of LODR, the stock exchanges to submit to SEBI their no objection letter on IFSC Stock Exchanges to submit their no
the draft Scheme after inter-alia ascertaining whether the Scheme is in compliance with securities laws objection letter to IFSCA. IFSCA to provide
within 30 days of receipt of draft scheme or within 7 days of date of receipt of satisfactory reply on comments on the draft Scheme to IFSC
clarifications from the listed entity and/or opinion from independent CA, if any, sought by stock Stock Exchanges
exchange(s), as applicable / or such timeline specified by SEBI.
Per Para (C)(1) of Part I of the SEBI Scheme Circular, SEBI is required to provide comments on the draft
Scheme to the stock exchanges.
123Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activity Remarks
5. Per Regulation 94(3)/94A(3) of LODR, stock exchanges to send no-objection letter within 7 days of IFSC Stock Exchanges to send their no-
receipt of comments from SEBI / such timelines specified by SEBI. objection letter upon receipt of comments
from IFSCA
6. Per SEBI Scheme Circular and SEBI Debt Circular, Company is required to submit a complaints report A copy of such report to be provided to
(consisting of complaints / comments written directly to the Company or forwarded to it by the stock IFSC Stock Exchanges
exchanges or SEBI) to the stock exchanges, and the Scheme and specified documents must be hosted on
the websites of the stock exchanges.
7. Stock exchanges are required to thereafter issue their no objection letter to the Company, post which the IFSC Stock Exchanges to also issue their
Scheme may be filed with NCLT within 6 months from date of issuance (Regulation 94(3)/94A(3) of no-objection letters to the Scheme
LODR).
8. Per SEBI Scheme Circular/ SEBI Debt Circular, Company to disclose the no-objection letters i.e. Company to also disclose no objection
Observation Letters of both the stock exchanges on its website within 24 hours of receiving the same. letters of IFSC Stock Exchanges also.
Company can file the Scheme with jurisdictional National Company Law Tribunal (“NCLT”) only after
Disclosures on exchanges in both
receipt of no objection letters from stock exchanges.
jurisdictions.
9. Companies to apply to relevant benches of NCLT, as applicable, and obtain directions for (i) holding Companies Act, 2013
shareholders’ meeting; and (ii) holding / dispensation of secured and unsecured creditors’ meetings.
[The shareholders’ in IFSC will also be
Upon the application by the Company or its members and as per the directions of the respective NCLT, a considered]
meeting of the creditors or class of creditors, or of the members, as the case may be called upon.
10. Company to dispatch notice of the NCLT convened meetings to each class of shareholders and creditors A similar intimation will be required to be
(as directed by NCLT). Company to also publish advertisement of notice of NCLT convened meetings in made to the IFSC Stock Exchanges as well
newspapers. Company to send intimation to stock exchanges regarding issuance of notice within 12
No separate advertisement may be
hours.
mandated in IFSC
11. Company to dispatch notice to Central Government, Registrar of Companies, Official Liquidator, Income Notice may also be sent to IFSCA and IFSC
Tax authorities, stock exchanges, SEBI, Reserve Bank of India, Competition Commission of India and any Exchanges as well.
124Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activity Remarks
other regulators (as may be directed by NCLT), asking them to make representations on the Scheme if
any to be made within 30 (thirty) days of receipt of notice
12. Company to hold meetings of the shareholders and creditors (as directed by NCLT) for approval of the Disclosures under SEBI LODR Regulations
Scheme. Company to send intimation to the stock exchanges about the proceedings of the meetings
[Same as above]
within 12 hours as required under Regulation 30 read with Schedule III, LODR
13. Per Regulation 44 of LODR, the Company is required to inform the stock exchanges regarding the voting Disclosures under SEBI LODR Regulations
result of the abovementioned shareholder and creditor meetings.
[Same as above]
14. Filing and admission of company scheme petition with NCLT and fixing of final hearing date. Will continue to apply
15. Notice of hearing of petition to be served by the NCLT on the objectors, Central Government, Official Disclosures under SEBI LODR Regulations
Liquidator and other authorities who made representations and have desired to be heard in their
[Same as above]
representation and publish advertisement (for notice of final hearing).
Company to inform the stock exchanges regarding the publication of advertisement under Regulation 30
of LODR read with Schedule III, within 12 hours.
16. Final hearing before NCLT for sanctioning the Scheme. Will continue to apply
17. Receipt of certified copy of NCLT order and scheme from NCLT registry Will continue to apply
Company to conduct a board meeting taking the Scheme on record and to fix the Record Date in
18. Disclosures under SEBI LODR Regulations
accordance with Regulation 42 of LODR for determining the list of eligible shareholders, and inform the
stock exchanges. [Same as above]
The Company is required to provide 7 (seven) working days of prior notice to the stock exchanges for
fixing the Record Date.
125Direct Listing of Listed Indian Companies on IFSC Exchanges
Step Activity Remarks
The Company is required to file an application with the stock exchanges for listing of new shares with the
19. Similar applications will be required be
stock exchanges.
made to the IFSC Stock Exchanges (in
respect of listing in IFSC). The stock
The Company is required to make applications for: (i) in principle listing and trading approvals; (ii)
exchanges in IFSC shall seek NOC of
relaxation of Rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957; and subsequently, (iii) final
Indian exchanges prior to granting in-
listing and trading approvals to the stock exchanges for the new shares of the Company to the stock
principle approval; and vice versa in case
exchanges.
of listing on Indian exchanges.
Company to file Form FC-GPR within statutory timelines, if applicable.
20. Will continue to apply
126Direct Listing of Listed Indian Companies on IFSC Exchanges
Corporate Actions
[Information received from Exchanges in the Sub-Group]
Background
As shares of any listed entity is freely tradable on the Exchange, it keeps changing hands from one person to the other. Thus, if a company
wishes to declare any corporate benefit it first needs to ascertain which shareholders shall be entitled to the benefits. For the purpose
company set Record Date/Book Closure Date to ascertain the shareholders, and after intimation of the above date Exchange take the same
on record and provide the data to concern department like clearing for the purpose of setting of Ex-Date. Ex-Date being the date on which
actual adjustment of corporate action will be given. Record Date and Book Closure is files as per the Regulation 42 of SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.
Types of Corporate Action
1. Dividend (Final Dividend/Interim Dividend/Special Dividend)
2. Distribution (Return on Capital/Interest Payment)
3. Split/Sub-Division of Shares
4. Consolidation
5. Capital Reduction
6. Interest Payment
7. Redemption on account of Maturity
8. Part Redemption (X no. of debenture getting redeemed/Face value getting redeemed)
9. Rights
10. Bonus
11. Merger/Demerger
12. Buyback
13. Calls on Securities.
14. Meetings.
The following process is followed by company with respect to above Corporate Actions:
1. Companies filed the record date w.r.t. above corporate action with exchange through our electronic filing portal – NEAPS.
127Direct Listing of Listed Indian Companies on IFSC Exchanges
2. Entries on verification is take on record and approved.
3. Corporate Action which are taken on record is fetched by clearing department for the purpose of setting of the Ex-Date
4. After setting of Ex-Date at Clearing department end the same is fetched by our system and disseminated on exchange website.
5. On date prior to Ex-Date the corporate action is sent to Trade Ops Team through interface path.
6. The price with respect to concern corporate action will get adjusted on the Ex-Date as per the file provided.
Corporate Action in which circulars are issued
1. Sub-Division of Equity Shares/Consolidation of Equity Shares
• Exchange hosts a checklist on website for what all documents are required for the purpose of above corporate action.
• On receipt of documents, exchange officer verifies and issue circular w.r.t sub-division of equity shares or Consolidation.
• Company in turn apply for new ISIN with Depositories and provide the same to exchange for necessary change in Listing
and Trading system.
2. Capital Reduction - Circular issued w.r.t. suspension of trading on receipt of documents as per the checklist hosted on website and
set up is sent to trade for necessary change in there system.
3. Redemption - Circular issued w.r.t. suspension of trading on account of maturity on exchange website and set up is sent to trade
for necessary change in there system.
4. Call on Securities – Exchange issued circular w.r.t. suspension of partly paid securities.
• Company in turn provide time to shareholder to pay the remaining call amount.
• Company after completion of above period file for In-principle application for no. of shares on which call money is received.
On verification Exchange provide In-Principle approval.
• After In-Principle Approval company apply for corporate action on depositories and after receiving approval, the company
apply for Listing and trading approval.
• On receipt of documents exchange issue circular for trading approval effective next day.
5. Merger - Circular issued w.r.t suspension of trading in securities on exchange website and set up is sent to trade for necessary
change in their system.
128Direct Listing of Listed Indian Companies on IFSC Exchanges
6. Demerger - Circular issued w.r.t. movement of securities from rolling segment to Trade for Trade for purpose of price discovery.
7. Rights – Company set a record date to ascertain the shareholders. On receipt of record date exchange sent file to trade a day prior
to Ex-Date for price adjustment on the basis of rights ratio and premium.
8. Bonus -
a. Intimation of Board Meeting pursuant to Bonus issue by Company to Exchanges.
b. Company seeks shareholder approval. On Receipt of shareholders approval company sets a Record Date as Regulation 42 of
SEBI (LODR) Regulations, 2015.
c. Price Adjustment w.r.t Bonus Ratio on Ex Date.
9. Dividend –
a. Company Intimate exchange regarding Board Meeting pursuant to dividend by Company to Exchanges as per Regulation 29
of SEBI (LODR) Regulations, 2015.
b. Intimation of Outcome of Board Meeting in which Company discloses Dividend amount and percentage.
c. Fixing of Record date as per Regulation 42 of SEBI (LODR), 2015 to ascertain the shareholders to whom the dividend will
be distributed.
d. Price Adjustment w.r.t Amount of Dividend on Ex Date.
e. Dividend needs to be distributed within 30 days from the date of declaration.
10. Part Redemption – On Receipt of Record date, Exchange passes upto the part redemption a system entry and informed Trade Ops
through service now request.
129Direct Listing of Listed Indian Companies on IFSC Exchanges
OFS Allocation Process: NSE being Designated Stock Exchange
[Information received from exchanges in the sub-group]
The bidding process in an OFS is for two trading days, on first day (T day) Non-Retail buyers can place the bids, Retail buyers can place
bids on second day (T+1), also non-retail buyer can carry forward the bid on T+1 day. Buyers cannot bid at a price below the floor price
i.e. a minimum price at which the seller intends to sell the shares.
T-1 day
1. Receipt of OFS Notice from the Company
2. Send security setup to the IT team on T-1 or T day
T Day (IS day):
1. Receipt of bid files from NSE MSD team and the other exchange (if other stock exchanges are also involved in the bidding process)
2. Share the requisite bid files to IT team for allocation process
3. Confirmation to IT team for minimum reservation to Mutual Funds and Insurance companies.
4. Confirmation to IT team on allotment price/cut off price
5. Receive final allocation files from IT team
6. Send the final allocation files to MSD team and Other Exchanges
7. Prepare multiple seller allocation file in case there are multiple sellers in an OFS
8. Prepare website file
9. Sending the above to website team for updating of details on website
10. In case of OFS of an PSU Company, prepare and share MIS of allocation details
T-1 Day (Retail Day):
1. Receipt of bid files from NSE MSD team and the other exchange (if other stock exchanges are also involved in the bidding process)
2. Share the requisite bid files to IT team for allocation process
3. Receive final allocation files from IT team
4. Send the final allocation files/rejection files to MSD team and Other Exchanges
130Direct Listing of Listed Indian Companies on IFSC Exchanges
5. Prepare multiple seller allocation file in case there are multiple sellers in an OFS
6. Prepare website file
7. Sending the above to website team for updating of details on website
8. In case of OFS of an PSU Company, prepare and share MIS of allocation details
OFS Allocation process
This has refence to the SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/10 dated January 10, 2023 with regards to Comprehensive
Framework on Offer for Sale (OFS) of Shares through Stock Exchange Mechanism. Where in SEBI has change the allocation process of OFS.
The unsubscribed portion of non-retail category shall be eligible for allocation in the retail category and vice versa.
Example: Total OFS is of 100 Share from which 90 is available to non-retail category and 10 shares are available to retail category, from
which on Tday 80 shares are allocated and remaining 10 shares remain unsubscribed, the unsubscribed portion i.e. 10 shares of non-retail
category shall be eligible for allocation to the retail category. Therefore, for retail category now the allocation is available for 20 Shares.
(10 + 10).
131Direct Listing of Listed Indian Companies on IFSC Exchanges
OFS (Offer for Sale) Secondary Market
[Information received from exchanges in the sub-group]
Background
OFS (offer for sale) is an easier way to sell shares through the exchange platform for listed companies. SEBI first introduced the OFS
mechanism in 2012. On January 10, 2023, SEBI has come out with comprehensive framework on OFS, which allows Promoters as well as
non-promoters to sell share through Stock Exchange Mechanism.
Regulatory Provision
1. All promoter(s) or promoter group entities of such companies that are eligible for trading and are required to increase public
shareholding to meet the minimum public shareholding requirements.
2. OFS mechanism shall also be available to companies with market capitalization of INR 1,000 Cr. and above.
3. In case a non-promoter shareholder offers shares through the OFS mechanism, promoter(s) or promoter group entities of such
companies may participate in the OFS to purchase shares subject to compliance with applicable provisions of SEBI (Issue of Capital
and Disclosure Requirements) Regulations, 2018, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and
Regulation 38 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
4. Promoters of eligible companies shall be permitted to sell shares within a period of 2 (two) weeks from the OFS transaction to the
employees.
5. Size of OFS should be minimum Rs. 25 Cr. However, If OFS is for MPS requirement the same can be less than 25 Cr.
6. Green Shoe Option: The maximum number of shares that the seller may choose to sell over and above the Base offer.
Operational Checks at Exchange End
If the company is Jointly Listed on all the Exchange – Exchange Received the Notice on T-1 Day.
1. Seller decides the Designated Stock Exchange and Clearing Corporation.
2. Designated Stock Exchange along with other exchanges checks the notice – Check Points:
a. Seller Name and PAN No. as per the notice and Seller details which are additionally sort.
b. No. of Shares whether the seller has that much no. of shares as per the latest shareholding patterns.
132Direct Listing of Listed Indian Companies on IFSC Exchanges
c. We received the undertaking as per the circular in which the seller entity confirms that they had not purchased and sold
shares as per the cooling off period.
i. For most liquid shares: +2 weeks
ii. For liquid shares: +4 weeks and
iii. For illiquid shares: +12 weeks
d. Lastly the allocation methodology that the minimum 10% is to be reserved for Retail Investor and in Non-Retail Category
minimum 25% is reserved for mutual funds.
e. Lastly, the allocation shall be at or above the Floor Price.
3. On T Day the offer is opened for Non-Retail Category and on T+1 Day the offer is open for Retail Category.
4. If on T Day, there is an over subscription the Seller can go with the Green Shoe Option and the notice for the same is to be submitted
to all the exchanges and the same is disseminated on the exchange website.
133Direct Listing of Listed Indian Companies on IFSC Exchanges
DEPOSITORIES
[Information received from Depositories in the Sub-Group]
1. BENEFICIAL OWNERS REPORTING
India International Depository IFSC Limited (“IIDI”) shall provide the information relating to changes in holding pattern periodically in
specified data format.
The following changes in beneficial owners will be provided on a pre-determined schedule:
a) Change in Address
b) Change in the Holding of existing beneficial owners.
c) New beneficial owners.
The Issuer/R&T Agent shall request the IIDI, to provide the details of the Beneficial Owners before any corporate action. The beneficial
owner report shall contain the following details: ISIN, Client ID, Beneficial Owner, Beneficial Owner Holdings, Beneficial Owner Address,
Lock -in- details, Amount paid -up on security, Effective date of holdings etc. (Benpos sample file format attached). In case of any holdings
in the suspense account, IIDI shall download the quantity held in suspense account to enable reconciliation of total holdings.
2. RECONCILIATION
Reconciliation shall be done on a daily basis between IIDI and Issuer/RTA through system driven process of EOD where IIDI holding in
system with the holdings in Register of Members (ROM) maintained by Issuer/RTA.
134Direct Listing of Listed Indian Companies on IFSC Exchanges
3. CORPORATE ACTIONS PROCESS:
From the operational point of view, corporate actions have been classified into the following categories:
CORPORATE ACTIONS
NON-CASH CASH
Initial Public Offer / FPOs Dividend Payment
Bonus Issue I Interest Payments
Rights Issue
Buy back of shares (Tender offer)
OFS Offer for sale
Initial Public Offer Procedure:
An agreement has to be entered into as given:
Where the issuer has an in-house Registry, then the issuer should enter into a Bipartite Agreement with IIDI.
Where the issuer has appointed a Registrar for the transfer work, the issuer and the transfer agent will enter into a Tripartite
Agreement with IIDI.
The Issuer/R&T Agent shall seek confirmation from IIDI on whether electronic download of allotment details can be made for the security
under process. Assuming ISIN will be of domestic segment and pari passu in all respects.
135Direct Listing of Listed Indian Companies on IFSC Exchanges
The Issuer / RTA processing of application form, allotment statement and refund of application money for unsuccessful applicants will be
made as per the existing procedure.
The Issuer / R&T Agent shall download the allocation statement containing details of the Beneficial Owners to IIDI as given below
(indicative):
ISIN
Depository where the Dematerialised security is to be kept
Participant
Client a/c no.
Beneficial Owner(s) name(s)
Beneficial Owner(s) address
Age
IT PAN No: (For IFSC jurisdiction related ID no.)
Bank Account details
Nominee Name
Allotted quantity
Lock-in period (if applicable)
Lock-in release date (in case of blocking)
Lock-in reason
Amount paid-up per security
In case the securities are locked-in, then the Issuer/ R&T Agent has to inform IIDI about those holdings & the lock-in period along with the
reason code and the lock-in release date.
The following are the reason codes:
1 Lock in period for minimum contribution
2 Lock in period for excess contribution by promoters
3 Lock in period for contributions not reckoned for minimum specified percentage.
136Direct Listing of Listed Indian Companies on IFSC Exchanges
4 Lock in period where promoters’ contribution includes holdings prior to issue.
5 Lock in period for firm allotments and preferential allotments.
In case of partial allotment, the allocation statement containing the details of the securities allotted in the electronic form shall be
downloaded to the IIDI. The refunds may be effected as per the existing procedure i.e. the refunds will be sent to the investors by way of
refund orders. The refunds will be handled outside the IIDI system. Simultaneously, the Issuer/R&T Agent shall also inform the investor
of the allotment, payment schedule and allotment money details, refunds, etc. as per the existing procedures. IIDI shall validate the
allocation statement and electronically acknowledge the receipt of the allocation statement to the Issuer/R&T Agent. The allotment
schedules prepared for listing of the security on the stock exchange shall contain the details of allotment in both the electronic form as
well as in the physical form. In case of mismatch of Client data between the data downloaded from Issuer/ R&T Agent and the data with
the Participants, the mismatched quantity will be kept in a suspense account and resolved through the collective action from IIDI and R&T
Agent/ Issuer.
Documents to be provided for various corporate actions are as follows:
Initial Public Issue of shares
1. Certified true copy of the Shareholders’ Resolution approving the issue of shares.
2. Certified true copy of the Board Resolution for allotment of shares
3. Copy of the approval of stock exchange for basis of allotment
4. Corporate Action Information Form (for shares) duly filled. (Separate forms for Debit / Credit (as applicable)) Download
5. Confirmation stating that the new shares are pari-passu in all respects with the existing shares. (As per SEBI circular No.
SMDRP/NSDL/3254/00 dated February 18, 2000, shares issued by companies should be pari-passu in all respects and the same
ISIN number should be allotted).
6. Offer Document for the issue.
7. Certificate from the Lead Manager confirming that the relevant IFSC/SEBI guidelines for the public issue have been complied
with.
8. Bendem Validation letter
9. Corporate action and Document processing fees
10. Name confirmation letter from RTA
137Direct Listing of Listed Indian Companies on IFSC Exchanges
Bonus Issue
1. Certified true copy of the Shareholders’ Resolution approving the issue of shares.
2. Certified true copy of the Board Resolution for allotment of shares.
3. Copies of the letters of "in-principle" listing approvals of the stock exchanges obtained after completion of all listing
formalities except credit of shares directly in dematerialised form and / or despatch of physical certificates (Ref. SEBI
Circular No. SMDRP/Policy/Cir-15/2001 dated March 8, 2001 and MRD/Policy/Cir – 35/2003/29/09 dated September 29,
2003, in terms of which, the company agrees to obtain ‘in-principle’ approval for listing from the exchanges having nationwide
trading terminals where it is listed, before issuing further shares or securities. Where the company is not listed on any exchange
having nationwide trading terminals, it agrees to obtain such ‘in-principle’ approval from all the exchanges in which it is listed
before issuing further shares or securities).
In case the company is unlisted, a copy of PAS-3/Form No. 2 (return of allotment) filed by the company with the Registrar
of Companies along with copy of ROC counter receipt.
4. Corporate Action Information Form (for shares) duly filled Download
5. Confirmation stating that the new shares are pari-passu in all respects with the existing shares. (As per SEBI circular No.
SMDRP/NSDL/3254/00 dated February 18, 2000, shares issued by companies should be pari-passu in all respects and the same
ISIN number should be allotted).
6. Copy of the letter / circular of the stock exchange confirming / notifying the record date.
In case the company is unlisted, copy of letter / notice sent to the shareholders informing them about the record date
7. Corporate action and Document processing fees.
8. Name confirmation letter from RTA
Rights Issue
1. Certified true copy of the Shareholders’ Resolution approving the issue of shares.
2. Certified true copy of the Board Resolution for allotment of shares.
3. Copies of the letters of "in-principle" listing approvals of the stock exchanges obtained after completion of all listing
formalities except credit of shares directly in dematerialised form and / or despatch of physical certificates (Ref. SEBI
Circular No. SMDRP/Policy/Cir-15 /2001 dated March 8, 2001 and MRD/Policy/Cir – 35/2003/29/09 dated September 29,
2003, in terms of which, the company agrees to obtain ‘in-principle’ approval for listing from the exchanges having nationwide
138Direct Listing of Listed Indian Companies on IFSC Exchanges
trading terminals where it is listed, before issuing further shares or securities. Where the company is not listed on any exchange
having nationwide trading terminals, it agrees to obtain such ‘in-principle’ approval from all the exchanges in which it is listed
before issuing further shares or securities).
In case the company is unlisted, copy of PAS-3/Form No. 2 (return of allotment) filed by the company with the Registrar of
Companies along with copy of ROC counter receipt.
4. Corporate Action Information Form (for shares) duly filled. (Separate forms for Debit / Credit (as applicable)) Download
5. Confirmation stating that the new shares are pari-passu in all respects with the existing shares. (As per SEBI circular No.
SMDRP/NSDL/3254/00 dated February 18, 2000, shares issued by companies should be pari-passu in all respects and the same
ISIN number should be allotted).
6. Offer Document for the issue.
7. Corporate action and Document processing fees
8. Name confirmation letter from RTA
Rejected Cases
1. CA form (in attached format) (being digitally signed by Managing Director/ Company Secretary) Download
2. Corporate action fees
3. Name confirmation letter from RTA
4. Rejection Report
Buy back of shares (Tender offer)
1. Certified true copies of Shareholders’ and Board Resolution approving the buyback of shares.
2. Copy of offer document\terms of offer
3. Transaction statement from the Depository Participant for the buy-back account.
4. Corporate Action Information Form (for extinguishment) as per the format enclosed. Download
5. Capital of the company, pre and post extinguishment in amount (this should include details of shares extinguished in the
physical form as well).
6. Stamp Duty - In case of Demat buyback of shares Stamp duty should be paid through DPID Client ID of escrow demat account
opened by the Issuer
139Direct Listing of Listed Indian Companies on IFSC Exchanges
7. Corporate action and Document processing fees
8. Name confirmation letter from RTA
Buy-back of shares (open market)
1. Certified true copies of Shareholders’ and Board Resolution approving the buyback of shares
2. Copy of the Public Announcement. (Can be downloaded from IFSC/SEBI Site.)
3. For extinguishing the shares bought back in the demat mode, Issuer/R&T Agent will have to execute a debit corporate
action. For each extinguishment, submit the following documents to IIDI:
1. Transaction statement from the Depository Participant for the buy-back account.
2. Capital of the company, pre and post extinguishment in amount (this should include details of shares extinguished
in the physical form as well)
3. Corporate Action Information Form (for extinguishment) as per the format enclosed Download
4. Corporate action and Document processing fees
5. Name confirmation letter from RTA
RIGHTS ISSUE
In the case of a rights issue, the rights application form shall contain a provision for the shareholder to receive the rights either in the
Physical or in the Dematerialised form.
The Issuer/ R&T Agent shall seek the details of beneficial owner’s details from IIDI informing the following:
ISIN
Issuer /R&T Agent id
Book Closure Period / Record Date
IIDI shall send the details of beneficiary owners to Issuer/R&T Agents.
The rights entitlements are calculated by the Issuer/ R&T Agent as per the usual procedure for both securities held in electronic and
physical form.
140Direct Listing of Listed Indian Companies on IFSC Exchanges
The Issuer / R&T Agent shall send rights application forms to the existing shareholders including the Beneficial Owners. The rights
advise shall contain the client-id and the DP-id.
The Beneficial Owners / Renouncees will apply for the Rights through the Collection Banks as usual. However, the investor may indicate
the mode in which he desires to receive the shares.
The allotment process is as per the usual procedure. If the shareholder/ beneficial owner has not clearly indicated choice of delivery
(electronic/physical) or if the information is inadequate, the allotment shall be in physical form.
Refund process takes place outside the IIDI system as per the existing procedures.
The allotted entitlement to beneficial owners/ Renouncee shall be credited to IIDI account in the Register of Members.
Issuer / R&T Agent shall intimate the Beneficial Owner about the quantity allotted as per the existing procedure.
The Issuer/ R&T Agent may validate on the front-end machine the DP -id and the Client-id of the allottees who opted for the electronic
shares before sending the information to the IIDI. In case of errors detected during the validations the Issuer/ R&T Agent shall process
the allotment for the physical certificates.
The IIDI would be informed of the rights allotted to those who opted for electronic holdings through the corporate allocation statement
containing the following details:
Client account no.
DP-id
ISIN
Quantity allotted
IIDI shall validate the allocation statement and electronically acknowledge the receipt of allocation statement to the Issuer/R&T Agent.
This acknowledgment will serve as a proof of dispatch of the certificates in Dematerialised form. In case of mismatch of client data
between the data downloaded from Issuer/ R&T Agent and the data with the Participants, the mismatched quantity will be kept in a
141Direct Listing of Listed Indian Companies on IFSC Exchanges
suspense account and resolved as per regular procedure. The IIDI downloads the details of the rights allotments to the respective DPs
who in turn intimate their client’s. The allotment schedules prepared for listing of the security on the stock exchange shall contain the
details of allotment both in the electronic form as well as in the Physical form.
BONUS ISSUE:
The Issuer/ R&T Agent shall intimate a book closure or record date to IIDI once bonus issue is announced.
The Issuer/R&T Agent seeks downloading of Beneficial owner data from IIDI. IIDI shall send the details of Beneficial owners.
The bonus entitlements are calculated by the Issuer/ R&T Agent for the Beneficial Owner on par with the shareholders.
Beneficial owners shall be informed of the bonus entitlements by the Issuer/R&T Agent.
IIDI shall allot new ISIN code for the bonus shares if they are non-pari passu with the original securities.
The details of bonus allotted is downloaded by the Issuer/ R&T Agent to the IIDI through a Corporate Allocation report. IIDI shall
validate and acknowledge the download. This acknowledgment is proof of dispatch of share certificates to Beneficial Owners in the
electronic form.
Listing of Bonus shares and treatment of fractional allotments shall be as per the normal procedures.
CASH BENEFITS:
The following are the cash benefits the beneficial owners are entitled to:
1 Dividends
2 Interest payments
The process for the payment of dividends and interest shall be as follows:
142Direct Listing of Listed Indian Companies on IFSC Exchanges
The Issuer/ R&T Agent announces a record date or a book closure prior to the declaration of dividend or interest due date.
a) The Issuer/ R&T Agent shall seek from IIDI, the list of beneficial owners as on the record date.
b) The DPs shall be required to advise the beneficial owners to intimate, the changes in tax status, bank mandates etc. to the
Issuer/R&T Agent.
The dividend / interest are calculated by the Issuer/ R&T Agent based on the holdings of the beneficial owners.
The dividend / interest warrants are printed and dispatched to the beneficial owners by Issuer/RTA.
The intimation regarding this is given to the Participants.
Foreign Investment Limit Monitoring
Foreign Investment Limit monitoring of specified clients is undertaken by depository designated by the Issuer in domestic segment and
accordingly data is shared by one depository to designated depository of Issuer for monitoring of foreign investment limits and
information dissemination. On similar lines IIDI shall provide required data of clients to respective designated depository for monitoring
mechanism.
IIDI shall provide required data of FPI and NRI clients to domestic designated depository in agreed format for monitoring of foreign
investment limits by the designated depository
143