Indian Businesses Eye Global Exchanges With Latest Amendment To Companies Act
The government has officially declared Oct. 30 as the effective date for the implementation of Section 5 of the Companies (Amendment) Act, 2020. This provision would allow public companies to issue a particular class of securities, to list them on permitted stock exchanges in foreign jurisdictions.
According to Manan Lahoty, partner at IndusLaw, the idea of allowing unlisted Indian companies to list overseas came with the amendment made to the Companies Act in 2020, but detailed rules and corresponding alignment of other laws were expected.
This action comes after the statement by the Finance Minister Nirmala Sitharaman in September, allowing Indian companies to engage in a direct "foreign listing" in International Financial Services Centres, specifically in GIFT City.
This will hopefully pave the way for Indian companies to list on other overseas exchanges, according to Abhimanyu Bhattacharya, partner at Khaitan & Co.
There are several advantages to companies who want to directly list overseas, which include attracting a larger and diverse pool of capital, improving corporate governance as well as benefit of dollar-denominated trades, which enables investors to save hedging and currency conversion costs, he said.
Now, due to the rigorous standards of major international exchanges, companies will have to adhere to top-tier corporate governance, instilling further investor trust, said Sonam Chandwani, partner at KS Legal and Associates.
What Are The Changes?
Section 5, which has been implemented, makes changes to Section 23 of the Companies Act, 2013. It adds new sub-sections to Section 23.
It states that certain types of public companies are allowed to issue certain types of shares or bonds. They can do this so that their shares or bonds can be listed on stock exchanges in other countries that are allowed by the law.
The central government will have the power to remove certain rules for specific types of public companies. This should also help the government's plan to reverse-flip holding structures of Indian companies as well, according to Khaitan & Co.'s Bhattacharya.
Currently, notifications are expected from the Ministry of Corporate Affairs on the type of securities that will be allowed for issuance by public companies in approved foreign jurisdictions, experts said.
-
Talking Points This Week: Leadership Shock At Nvidia, Earnings Strength, And The Fog Over Hormuz
The Anthropic IPO pricing and first trading day, Nvidia's upcoming earnings, and any fresh signals from Iran will set the tone for the following week.
-
Signature Play: The Classic Cocktail Is Dead. Or Is It?
Classic cocktails are disappearing from India's cocktail menus. But they're still being ordered, taught to bartenders and borrowed from. So, who's really having the last drink?
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
