Jio overseas listing — What does the US bourse rule book say

KS Badri Narayanan Chennai | Updated on May 29, 2020 Published on May 30, 2020

RIL plans to sell 20-25% in Jio via an IPO, most likely on the Nasdaq, say reports

Of late, overseas listing by India Inc is gaining a lot of transaction among the investing fraternity. In a move to facilitate Indian start-ups and other specialised sectors to raise capital overseas smoothly, Finance Minister Nirmala Sitharaman said: “Direct listing of securities by Indian public companies would be allowed in permissible jurisdictions. Necessary regulations allowing direct overseas listing by the Indian entity is expected soon after amendments to the Companies Act and FEMA regulations are passed.” As it is a work-in-progress, one has to wait for detailed guidelines, to be able to look at the fine print.

At present, Indian companies wishing to raise funds in overseas stock markets are allowed to do so only through depository receipts — American Depository Receipts and Global Depository Receipts. This means that, these companies should have underlying shares traded in the domestic market and comply with all domestic market regulations. However, once the proposed rule gets official stamp, Indian companies can directly list in overseas markets without meeting any regulatory obligations here.

This is why talk of Reliance Industries planning to list its telecom arm Jio in overseas markets has reverberated widely.

If media reports are to be believed, RIL plans to sell 20-25 per cent in Jio Platforms through an initial public offering in an overseas market, most likely on the Nasdaq. Listing on the NYSE is also not ruled out, some marketmen believe. While Reliance will time its listing process suitably, let us see what NYSE and Nasdaq want from companies if they wish to list on their platforms.


According to NYSE, a non-US company must satisfy at least one of the following conditions: A company should have an aggregate adjusted pre-tax income of $100 million (about ₹750 crore) or more for the last three fiscal years, and besides, each of the two most recent fiscal years should have greater than $25 million pre-tax income (about ₹190 crore); and revenues of the company should be $100 million (most recent 12-month period) and $75 million (about ₹560 crore) for the most recent fiscal.

However, it should have a minimum of 5,000 shareholders (worldwide) and at least 25 lakh shares should be held by the public. Market value of the publicly-held company should not be less than $60 million with a minimum price of $4/share.

According to Nasdaq, a company seeking to list on its Nasdaq Global Market Platform, must have a minimum of 12.5 lakh shares with the public. The market value of the company should be at least $45 million and the company should price the issue at least at $4/share.

Aggregate pre-tax earnings (income from continuing operations before income taxes) for the past three fiscals should be greater than $11 million (about ₹80 crore) and revenues should not be less than $110 million (about ₹825 crore) for the previous fiscal year.

Both the exchanges have strict corporate governance regulations as well as rules on AGMs, independent directors, audit committee, compensation to executive officers, nomination of directors, and code of conduct, among others.

Preparatory moves

In the past one month, Reliance Industries has roped in global investors including Facebook, KKR, General Atlantic and Vista into its telecom arm Jio for a total consideration of ₹78,500 crore, valuing the company at ₹4.9-lakh crore (or $73 billion). Now market is abuzz with rumours that Microsoft and Abu Dhabi State funds too are keen to invest in the company.

Reliance Industries raising funds even at this difficult time indicates that Jio may have good demand for its IPO. However, one has to wait for at least 12 months to see the actual demand until RIL files IPO papers. The timing of the IPO hopefully will take into consideration the secondary market mood too.

Published on May 30, 2020
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