Comments
The Centre is mulling over alterations to the Companies Act to allow Indian companies to list abroad, according to a Business Standard report.
The Companies Amendment Bill will likely be tabled in the ongoing Parliament session, with changes including decriminalization and a reduced compliance burden. The new amendments to Companies Act and FEMA regulations will roll out by the first quarter of the next financial year, as per media reports.
This will further help India’s homegrown companies to access a larger pool of capital. Currently, Indian companies tap foreign capital mostly through the American depository receipts (ADRs) or global depository receipts. However, this window is gradually becoming unpopular due to which Centre is now ready to explore other options to mobilise capital for the corporate and provide larger play for overseas investors in the country.
According to an official cited in Business Standard , the government will specify the jurisdictions where Indian companies can list. They will be compliant with the Financial Action Task Force.
At present, Indian companies are not allowed on foreign stock exchanges. Likewise, foreign companies are also not permitted to list their equity share on Indian stock exchanges.
Another senior analyst, quoted in the Business Standard, affirmed that companies prefer foreign listing since investors are more reliable and credible on these platforms. Foreign listings give more leverage to their stock.
In 2018, a panel of the Securities and Exchange Board of India (SEBI) had recommended that Indian companies will be permitted to list only in those jurisdictions that were treaty-bound to share information with India so that it may cooperate with India if there is an investigation, as per a Business Standard report.
Infosys was the first company to list its ADRs on Nasdaq, one of the two major stock exchange in the US. Later, around 15 Indian companies have tapped the ADR and GDR route, including ICICI Bank, HDFC Bank and Reliance Industries, according to media reports.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.