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To improve ease of doing business, the government on Sunday announced allowing Indian public companies to directly list their shares overseas. Also, private companies that list their debentures on stock exchanges will now not be regarded as listed firms.
The move will help Indian companies get access to multiple jurisdictions for raising capital, with differing costs and listing conditions, said experts. Besides, clarification with respect to listing of non-convertible debenture (NCDs) will ease compliance issues faced by private firms.
At present, some Indian companies have American Depository Receipts (ADRs) that are traded in the US, and several others have their Global Depository Receipts (GDRs). These include Infosys, ICICI Bank, HDFC Bank, and Reliance Industries.
“Necessary regulations allowing direct overseas listing by the Indian entity is expected soon after amendments to the Company Act and Foreign Exchange Management Act (Fema) regulations are passed,” said Finance Minister Nirmala Sitharaman, while announcing the fifth tranche of the stimulus package. This, even as the Cabinet okayed the move in February.
“Indian foreign exchange control laws don’t permit free convertibility of capital, and there are certain regulatory restrictions in relation to capital account transactions,” said Atul Pandey, partner, Khiatan & Co. According to him, this will give a much-needed shot in the arm to Indian firm looking at alternatives avenues to raise funds. #casansaar (Source - Business Standard)
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