The Ministry of Corporate Affairs (MCA) will soon release a draft report which will outline norms for companies seeking to list their shares overseas without first listing in India.
Current rules do not allow companies listing abroad without listing first in India. MakeMyTrip incorporated itself in Mauritius to work around the block and listed itself on the NASDAQ.
Now, to enable this, the MCA has proposed amendments to the Foreign Exchange Management Act (FEMA), the Income-Tax Act (I-T Act) and the Companies Act 2013, two regulatory officials told the Hindustan Times.
The proposed changes – cleared by the Cabinet in March – include adding enabling provisions to the Companies Act to allow certain classes of securities on stock exchanges in “permissible foreign jurisdictions” and changes in how share transfers are taxed in India, they added.
Moneycontrol could not independently verify the report.
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“Companies would be governed by rules of the jurisdiction in which they are listed. Countries deemed as permissible jurisdictions would likely have strong compliance, KYC and anti-money laundering norms, and a foreign action task force (FATF), they said.
A Securities and Exchange Board of India (SEBI) paper had suggested Canada, China, France, Germany, Hong Kong, Japan, South Korea, Switzerland, the UK and the US as options.
Once pushed through, this will allow Indian companies, including startup unicorns, access to alternative route for capital pool, and bring exposure to a broader, more global investor base, and lead to accurate benchmarking and higher valuations, Yash Ashar, partner and head of capital markets, Cyril Amarchand Mangaldas said.