 "GIFT City")
Experts noted that the move would encourage more entities to list themselves on the IFSC | Image: Bloomberg
The Finance Ministry on Thursday issued a notification allowing companies to list on stock exchanges in GIFT City with a minimum of 10 per cent public shareholding, compared to the previous requirement of at least 25 per cent public shareholding for continued listing on stock exchanges in India and GIFT City.
These revised thresholds, experts said, will allow Indian companies to access global capital and will be a step towards cementing India’s position in the global financial landscape.
The notification by the Department of Economic Affairs has amended the Securities Contracts (Regulation) Rules (SCRR), 1956, to ease the listing requirements for Indian companies seeking to list on international exchanges within International Financial Service Centres (IFSCs) at par with global standards.
“By reducing these thresholds, the amendments in SCRR facilitate easier access to global capital for Indian start-ups and companies in the sunrise and technology sectors. This will particularly benefit Indian companies going global and having ambitions to explore opportunities for expanding their presence in other markets,” a statement by the Department of Economic Affairs said.
The Centre had already notified regulations to enable the listing of public Indian companies in GIFT-IFSC in January, and the IFSCA had sought comments on a consultation paper on additional regulatory requirements issued in May.
“This is a welcome move, aimed at easing the requirements related to the listing of Indian companies on international exchanges within GIFT-IFSC. It is an important amendment that essentially lowers the minimum public shareholding requirement for listing from 25 per cent to 10 per cent,” said Suhana Islam Murshedd, Partner, AQUILAW.
Experts noted that the move would encourage more entities to list themselves on the IFSC, as the latest amendment enables them to retain control of their company while attracting public capital.
“Additionally, this incentivises foreign investors to invest, thereby boosting foreign exchange inflows, while allowing such investors to consolidate their positions,” said Mohit Chaudhary, Managing Partner, Kings & Alliance LLP.
Chaudhary, however, added that a reduction in public float would result in a smaller number of shares being available to the public, which could have several implications for a stock. “A smaller float can be more vulnerable to pump-and-dump schemes because of its susceptibility to price manipulation,” he said.
First Published: Aug 29 2024 | 2:22 PM IST
