The government has taken a decision to enable the direct listing of listed and unlisted companies on overseas exchanges at the IFSC (International Financial Services Centre), said Union Finance Minister Nirmala Sitharaman.

“I had said in May 2020 that direct listing of securities by Indian public companies would be permissible in foreign jurisdictions. I’m pleased to announce that the government has taken a decision to enable direct listing of listed and unlisted companies on the IFSC exchanges,” Sitharaman said at an event in Mumbai.

The move will enable “start-ups and companies of like nature to access the global market through GIFT IFSC,” Sitharaman said.

“This will also facilitate access to global capital and result in better valuation for Indian companies,” she said at an event to launch  the AMC Repo Clearing Ltd. and the Corporate Debt Market Development Fund (CDMDF).

At present, Indian companies can access overseas equity markets only through depository receipts or by listing their debt securities on foreign markets. In 2020, the Centre amended the Companies Act, allowing the direct listing of Indian companies on foreign stock exchanges, but the framework has not been put in place so far.

“It is worth emphasising that the government’s vision for GIFT-IFSC transcends much beyond the realm of traditional finance and ventures into the realm of thought leadership...,” Sitharaman said.

Single securities market code

Referring to the proposed move to consolidate the laws dealing with the securities market in the country into a single securities market code, the Minister opined that this is vital as it is intended to consolidate the three different laws — the SCRA (Securities Contracts Regulation Act) of 1956 vintage, the SEBI Act of 1992, and the Depositories Act of 1996 — into a single act with an updated and rationalised set of provisions.

The single securities market code is intended to be future-ready, taking into account developments from a long-term perspective as well as promoting ease of doing business.

“This will also cater to the developmental and regulatory needs of the country’s capital markets...

“A lot of groundwork has already been done. We expect this new code to become a reality soon,” Sitharaman said.

Financial Sector Regulations

The Minister observed that at this stage of our economic development, the main focus of our financial sector regulations should be on market development as well as investor protection.

She said our market should be enabled for the ease of raising capital, just as investors should be given the necessary protection.

Sitharaman underscored that India is competing not only with other emerging markets but also with advanced economies to attract investments. So, the country needs to enhance the mobilisation of domestic savings towards financial assets by easing access to the financial markets and strengthening investor grievance redressal mechanisms.

“We may also have a regulatory impact assessment to critically assess the positive and negative effects of proposed and existing regulations and non-regulatory alternatives.

“It is an important element of evidence-based policy making, and I feel this can enhance accountability and transparency in the policy and decision-making processes,” she said.

The Minister observed that time limits to decide applications under various regulations should be laid out in the interest of ease of doing business.

All financial sector regulators must consider regulations proportionate to risks and factor in risk mitigation through the use of technology-enabled systems by regulated entities.

Sitharaman said the trinity that is important for the country is the creation of a conducive environment for starting and running businesses, the maintenance of market integrity, and the sustenance of market stability.

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