The government issued a notification stipulating a lower public shareholding requirement for companies listing on stock exchanges at the International Financial Services Centre (IFSC)-a deemed foreign jurisdiction-a move aimed at wooing firms to list there.
The finance ministry amended the Securities Contract (Regulation) Rules to state that companies listing their stock on an IFSC exchange have to maintain at least 10% public shareholding, according to a late evening notification.
“The amendment has been brought about to encourage Indian and foreign companies to list their securities in stock exchanges located in IFSC,” said Mayank Arora, director, regulatory, Nangia Andersen India.
While companies consider several factors, including liquidity, cost of listing and regulatory environment, this amendment would “certainly nudge them to explore the option of listing” on IFSC exchanges, Arora said.This amendment will also complement the government’s January decision to allow domestic public companies to issue and list their shares directly on a couple of global exchanges housed at the sole IFSC in Gujarat’s GIFT City.It had notified the new regulatory framework, setting the stage for Indian startup unicorns and other entities, especially those in the sunrise and technology sectors, to have easier access to a larger pool of foreign capital, experts said.Importantly, Indian residents are not allowed to undertake share transactions on the IFSC exchanges, which are meant for only foreign investors and non-resident Indians.