Companies of India can list themselves on Indian stock exchanges. And we can see many IPOs that are coming to list themselves. But many companies want to list themselves on foreign stock exchanges. This happens, but it happens through Global Depository Receipts and American Depository Receipts. But now this is going to change.
Ministry of Corporate Affairs is working on this matter. And they are very soon going to announce the same. After this announcement, companies will be able to list themselves on the foreign stock exchanges directly. And the ministry is setting regulations for the same right now.
As we discussed above, right now companies can list themselves. Global Depository Receipts and American Depository Receipts enables the companies to do so. But not all of them can do this. Only some companies can list themselves on the foreign stock exchange. And this is according to the Companies Amendment Act, 2020.
Official Statement Regarding Listing of Companies on Foreign Stock Exchanges
“The conditions under which companies will be allowed to list directly on foreign exchanges will be based on meeting certain thresholds including average profit over the past three years, paid-up share capital, securities premium and the value of intangible and tangible assets of the company,” said a government official aware of developments.
“In the case of other regulations, it is likely that they would have to follow the stricter of two regulations,” said the official.
There will be six criteria for listing a company directly on foreign exchange. But a company will have to meet at least three criteria out of these six.
There are many advantages if a company lists itself on a foreign bourse. These are different sources of revenue, better valuation, and many more. And after this change, all the companies will be able to list themselves on the foreign bourses. And not only companies but start-ups too.
The authority additionally said that at first, organizations can list themselves in the US, UK, Japan, South Korea, Germany, and Canada and that the Ministry would logically add to the rundown of admissible wards.
Another administration official noticed that specific issues with respect to unfamiliar posting actually should have been resolved and that organizations being recorded abroad may need to distribute two arrangements of budget reports to manage any distinctions in administrative prerequisites among India and the locale in which they are being recorded.