A finance ministry statement said unlisted Indian companies would be allowed for two years, on a pilot basis, to list and raise capital abroad without the requirement of prior or subsequent listing in the country . "At present, unlisted companies that are incorporated in India are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets," the statement said. After the initial two year period, the impact of this arrangement will be reviewed . While raising resour ces abroad, the listing company shall be fully compliant with the FDI policy in force, the finance ministry said. In case funds raised are not utilized abroad such companies would be asked to remit the money back to India within 15 days and these funds would be parked only in AD category banks recognized by RBI.
Experts said the government was trying to test overseas markets for companies, which are finding it tough to raise resources at home. "It is a freedom to companies. The government is testing whether there is an appetite for this," said D K Joshi, chief economist at ratings agency Crisil.
The finance ministry, the department of Industrial Policy and Promotion (DIPP) and the RBI will issue the notifications soon to implement the listing process. The approval to list abroad would be subject to several conditions. Unlisted companies may be allowed to list abroad only on exchanges in International Organization of Securities Commissions ( IOSCO)/ Financial Action Task Force ( FATF) compliant jurisdictions or those jurisdictions with which Sebi has signed bilateral agreements.The companies will have to file a copy of the return, which they submit to the propos ed exchange /regulators and also to Sebi for the Prevention of Money Laundering Act (PMLA) rules. They will have to comply with Sebi's disclosure requirements . Some experts said the new rules are more to address the sentiment issue. The new rule does not change much for companies to list, but it's more sentimental in nature. "A company's listing depends on several factors like liquidity that an exchange can offer, robust trading and settlement system, strong listing rules and governance structure, nearness to a pool of large and loyal retail investors ," said Avinash Gupta, senior director & leader financial advisory, Deloitte India.
EXPLORING FOREIGN OPTIONS
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.
In case the funds raised are not utilised abroad such companies will be asked to remit the money back to India within 15 days and these funds will be parked only in AD category banks recognised by RBI The government is trying to test overseas markets for companies that are finding it tough to raise resources at home, say experts The finance ministry, the department of Industrial Policy and Promotion (DIPP) and the Reserve Bank of India (RBI) will issue the notifications soon to implement the listing process .
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