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Sebi panel recommends direct listing of Indian firms on foreign bourses

Date: 05-12-2018
Subject: Sebi panel recommends direct listing of Indian firms on foreign bourses

An expert committee on Tuesday recommended markets regulator Sebi to allow direct listing of equity shares of companies incorporated in India on foreign stock exchanges and vice versa.

“Sebi felt it appropriate to consider this due to the ongoing evolution and internationalisation of capital markets across the globe,” said the panel in its report.

Currently, Indian companies can list their shares through American Depository Receipts (ADR) and Global Depository Receipts (GDRs). Moreover, companies incorporated in India can list their debt securities on foreign stock exchanges directly through the masala bonds or foreign currency convertible bonds.

Sebi said equity listings by companies incorporated in India on foreign stock exchanges would allow them to access foreign capital at a lower cost. The equity listings of companies incorporated outside India on Indian bourses would improve the efficient allocation of capital and diversification for investors across the Indian economy.

However, the Sebi report warned about illegal transactions such as round-tripping of illegal funds. To avoid such irregularities, the committee has recommended permissible jurisdictions outside of India. A permissible jurisdiction includes a jurisdiction which has treaty obligations to share information and cooperate with Indian authorities in the event of any investigation.

The committee recommends that a minimum 10% of paid-up capital may be listed on Indian stock exchanges. Further, the issue size should be at least Rs 1,000 crore and allotment should be made to at least 200 investors.

List of foreign exchanges selected by the expert committee include Nasdaq, Shanghai Stock Exchange, Tokyo Stock Exchange, Korea Exchange, London Stock Exchange, Hong Kong Stock Exchange, Euronext Paris, Frankfurt Stock Exchange, Toronto Stock Exchange and SIX Swiss Exchange.

The committee of experts has nine members, including Avendus Capital managing director Ranu Vohra, Amarchand Mangaldas managing partner Cyril S Shroff, Kotak Investment Banking managing director and CEO S Ramesh, MakeMyTrip.com chairman & group CEO Deep Kalra and Zodius Capital Advisors senior managing director & CEO Neeraj Bhargava.

Morgan Stanley managing director Kamal Yadav, Latham & Watkins LLP partner Rajiv Gupta and KPMG and LLP global head of accounting advisory services Jamil Khatri are also part of the panel. Sebi executive director Surjit Prasad was the convenor of the committee.

Source: financialexpress.com