Cabinet Clears Proposal To Allow Direct Overseas Listing Of Indian Companies
Employees work at the Pocket Aces Pvt. studio in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Cabinet Clears Proposal To Allow Direct Overseas Listing Of Indian Companies

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The Union Cabinet has approved a proposal to allow direct overseas listing of Indian companies. For this framework, an enabling provision would be made under The Companies Act, 2013.

Currently, quite a few Indian companies have American Depository Receipts that are traded in the U.S. Some other corporates have Global Depository Receipts.

A depository receipt is a foreign currency-denominated instrument, listed on an international exchange and issued by a foreign depository to a domestic custodian.

Apart from providing an additional fundraising avenue for Indian companies looking to expand and boost their business activities, overseas listing of shares would also help in bringing more capital into the country.

Corporate Affairs Secretary Injeti Srinivas said the Companies Act, 2013, will have an enabling provision for listed as well as unlisted companies in India to list their shares abroad. The provision would be subject to certain conditions. "So making this enabling provision...that is the proposal which Cabinet has approved," he said.

According to Srinivas, it would be a broad enabling provision. The class of companies, types of instruments that can be listed and other things would be notified in the rules.

The rollout of the scheme in this regard might take a few months, he added.

"Now, like just you had a scheme for GDR/ADR, what will be the tax treatment and other issues? Most of it (will) get covered in subordinate legislation. It does not involve any amendment per se to the best of my understanding," Srinivas said.

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