Stakeholders seek detailed framework for direct overseas listing in Budget 2024

Ahead of the 2024 Lok Sabha elections, Union Finance Minister Nirmala Sitharaman is scheduled to unveil the Interim Budget today.

A clutch of industry stakeholders, including niche tech startups and venture capital funds , are pitching for a detailed framework and eligibility norms from the Modi regime for direct listing of Indian firms on overseas stock exchanges.

Until now, Indian companies have not been permitted to list directly in overseas markets, and instead use depository receipts — American Depository Receipts or Global Depository Receipts.

A fleshed-out blueprint for direct overseas listing would help local companies tap global capital from a wider set of specialized investors in new jurisdictions where valuations and investor outlook may be more apt or suitable.

In this backdrop, all eyes will be on whether the interim budget offers any guidance in this regard or announces any related directions for bodies like SEBI, RBI, MCA or the IT department.

Catch all updates on FM Sitharaman's Budget speech here

Investment bankers believe the Indian capital markets have the required depth and maturity to absorb listings of a wide range of new age companies, but add that some pockets may still desire the flexibility to list abroad.

"We feel that the only one sub sector ( where) people might still consider an overseas listing is the SaaS market, where the depth of US is far more and it's not really a product that you build for India, but it's more for the US and the European market. That trend might continue. But as I said, if the product is built for India, you have a far more serious conversation happening for Indian listing," Jibi Jacob, MD and Head ( Equity Capital Markets) , India, Jefferies told Moneycontrol earlier.

On January 24, a Finance Ministry notification okayed the direct listing of shares of Indian companies at GIFT City's exchanges, namely India International Exchange and NSE International Exchange. This is widely seen as the first step before the government opens the floodgates for exchanges abroad.

In October, following announcements by Finance Minister Nirmala Sitharaman, the government amended the Companies Amendment Act 2020 to allow a specified class of securities, issued by certain public companies, to list on stock exchanges in permitted foreign jurisdictions.

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Section 23 of the Act was amended to state that "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.

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