Government simplifies rules for direct listing at GIFT IFSC

The Department of Economic Affairs (DEA), Ministry of Finance, has notified an amendment to the Securities Contracts Regulation Rules (SCRR), 1957, with an aim to remove obstacles and cumbersome processes for Indian entities to list their securities on foreign exchanges. In this regard, this Amendment is a major step forward in facilitating the direct listing of equity shares by Indian companies at the IFSC located at GIFT IFSC, Gujarat for better access to the global capital markets.

The new regulations are especially welcome for Indian startups and companies in new sectors such as technology, for whom this would be a fast track to raising capital internationally. The amendments include provisions under the 'Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme' under the Foreign Exchange Management [Non-Debt Instruments] Regulations, 2019, and the Companies [Listing of Equity Shares in Permissible Jurisdictions] Rules, 2024. Together, these rules provide for a facilitating regulatory regime that allows the alignment of Indian listing requirements with globally accepted principles. This would facilitate Indian companies to issue and list their shares on permitted international stock exchanges within the GIFT IFSC with ease.

The key amendments include reducing the minimum public offer. Companies which aim to list specifically on international exchanges at GIFT IFSC are required to offer and allot at least 10 per cent of post-issue capital to the public. This represents a significant reduction from previous requirements and is designed to make listing more viable, particularly for startups and smaller companies that might find it hard to attain higher thresholds.

Besides the easy approach towards the initial listing, the DEA also makes continuous listing easier for companies already listed on international exchanges at the GIFT IFSC. Under the amended Rules 19(2)(b) and 19A of the SCRR, such companies shall have to maintain minimum public shareholding of 10 per cent. This is also in consonance with international practices and will enable Indian companies to be more competitive and attractive to international investors, who are used to these norms in other major financial centers.

These changes represent the Indian Government's bigger strategy to establish a dynamic and globally competitive financial services ecosystem inside the country. With this decrease in the bar to entry and moving the goalpost towards global norms, the amendments are expected to attract many more Indian startups and technology firms to the GIFT IFSC, positioning it as a gateway for Indian companies to international capital markets. This is very important for sunrise and technology industries, which usually need large doses of capital to scale up and become more globally competitive. GIFT IFSC, envisioned to compete with leading global financial hubs like Singapore, Dubai, and London, is gradually shaping up as the centerpiece of India's attempt to reform its financial sector. The government, through these changes, is not only making it easier for companies in India to raise international capital but also making the overall proposition of GIFT IFSC more attractive as a global financial centre.