Listing of Unlisted Companies outside India

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The Ministry of Finance has issued a Press Release dated 27 September, 2013 dealing with listing of Unlisted Indian Companies on overseas exchanges. Currently, unlisted Indian companies are not allowed to list on overseas Stock Exchanges. As per the Press Release, it has now been decided that unlisted companies may be allowed to raise capital abroad without the requirement of prior or simultaneous listing in India.

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Listing of Unlisted Companies outside India

  1. 1. LISTING OF UNLISTED COMPANIES OUTSIDE INDIA
  2. 2. Applicable Law Consolidated FDI Policy, 2013  As per the applicable law, for raising capital in the International market Companies required prior or simultaneous listing in the domestic market.  Unlisted companies, which have already issued securities by way of Foreign Currency Convertible Bonds (FCCB) or Depository Receipts (ADR/GDR) in international market, have to be listed in the domestic market on making profit or within three years of such issue of such securities, whichever is earlier. Lexplore Research Partners
  3. 3. Salient Features of the Press Release  As per a Press Release dated September 27, 2013, the Ministry of Finance decided that companies may be allowed to raise capital abroad without the requirement of prior or simultaneous listing in India.  The above rule is subject to the issuance of notification by MOF, DIPP and RBI.  The Scheme will be implemented on a pilot basis for a period of two years from the date of notification of the scheme. Lexplore Research Partners
  4. 4. Conditions to be fulfilled prior to the approval  Unlisted companies may be allowed to list abroad only on exchanges in IOSCO/FATF compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements.  The Companies shall file a copy of the return, which they will submit to the proposed exchange/regulators and to the SEBI for the purpose of Prevention of Money Laundering Act, 2002 (PMLA).  They shall comply with SEBI’s disclosure requirements in addition to that of the primary Lexplore Research Partners exchange prior to the listing abroad.
  5. 5.  While raising resources abroad, the listing company shall be fully compliant with the FDI Policy in force;  The capital raised abroad may be utilised for retiring outstanding overseas debt or for operations abroad including for acquisitions;  In case the funds raised are not utilised abroad as stipulated above, such companies shall remit the money back to India within 15 days and such money shall be parked only in AD category banks recognised by RBI. Lexplore Research Partners
  6. 6. Strategic benefits for Overseas Listing  Access to new and incredibly deep capital.  Economical option vis-a-vis PE or Debt Funding.  Brand building and wide media coverage         (especially internet companies). Additional visibility, exposure and prestige. Benefits to employees. New growth opportunities and better access to technologies. Surreal spike in valuation and under-pricing Increased liquidity and broad investor base Lowered cost of capital Enhanced protection to investors Dollar as currency for acquisition and will give impetus to easy exit Lexplore Research Partners
  7. 7. Benefits to Government and Economy  This would in a way help the Government to overcome the present Current Account Deficit (CAD).  Increase dollar inflows in India, as 15 days is pretty less time for Companies to utilize the capital raised abroad by funding projects and acquisitions.  Increase in foreign exchange reserves of the country. Lexplore Research Partners
  8. 8. THANK YOU www.lexplore.in Lexplore Research Partners

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