Following the development, certain classes of Indian public companies can now issue securities for the purpose of listing on foreign stock exchanges, the MCA is expected to issue rules and regulations to give effect to this notification.
In what could be termed as a move to make Indian companies global, the Ministry of Corporate Affairs (MCA) recently released a notification permitting certain classes of public companies to directly list on foreign stock exchanges.
The amendments to sections of the Companies Act, which came into effect on October 30, were proposed in September 2020. The amendment says, "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".
Furthermore, the central government will clarify which classes of public companies will be permitted to be listed on foreign exchanges. The subsequent provision states, "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.”
Following the development, certain classes of Indian public companies can now issue securities for the purpose of listing on foreign stock exchanges, the MCA is expected to issue rules and regulations to give effect to this notification.
"The notification, which was issued on October 30, 2023, has brought into effect the provisions permitting the listing of Indian public companies abroad", said Nitesh Mehta, Partner, M&A Tax, BDO India, commenting on the MCA's latest order. "As a next step, the government will need to release a further notification specifying the foreign jurisdictions where such listings will be permitted and outlining any additional rules or conditions in this regard," he further noted.
Currently, Indian companies will have to obtain Global Depository Receipts (GDR) to access foreign exchanges, however, this will eliminate the need for GDR.
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