Tarun Sharma Moneycontrol News
The Securities and Exchanges Board of India (SEBI) has not received major traction on the issue of overseas listing after being open for public comment.
SEBI had put out a public discussion paper on the listing of Indian companies on overseas exchanges and vice-versa. A source close to the development told Moneycontrol "SEBI did not receive major traction on this public discussion paper and Exchanges put suggestions to treat GIFT City as domestic and overseas both."
The lacklustre response may be a deterrent for exchanges located in the Gujarat International Financial Tec-City SEZ (GIFT City), which have been seeking the dual status of a domestic and foreign exchanges — a move which could help attract a wider market in the long run.
A source who spoke to Moneycontrol gave the example of Flipkart — an Indian brand registered in Singapore. If such companies wish to enter the Indian market, then they could theoretically list themselves under exchanges based in GIFT City to raise capital in a cost-effective way from both retail and foreign institutional investors.
A source told Moneycontrol "We have submitted our comments for the overseas listing discussion paper. We have sought for the status of exchanges under GIFT City to be domestic as well as overseas. However, in this discussion paper, GIFT City was treated as a domestic exchange."
In the discussion paper, exchanges in GIFT City were treated as a domestic exchanges, despite the Finance Ministry, SEBI and Reserve Bank of India (RBI) having treated these exchanges as overseas ones.
Another source told Moneycontrol "RBI, SEBI and even the finance ministry don't have clarity on exchanges in GIFT City. Sometimes, the regulator treated GIFT City exchanges as a domestic exchange and most of the time, they treat it as an overseas exchange".
The RBI treats banks in GIFT City as domestic banks, but banks permitted to carry out USD/INR convertibility are treated as overseas. The finance ministry’s department of Revenue also treats those exchanges that have been given a tax exemption in certain section for income tax rebate, are treated as domestic.
SEBI has also differed on its treatment of exchanges under GIFT City according to type of securities they deal with. Exchanges dealing with equity are considered domestic, while exchanges handling derivatives are considered as overseas.
However, overseas listing is not easy as there are taxation issues that needs to be addressed, with clearance required from the Central Board of Direct Taxes.
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