Foreign IPOs made easy for $
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New Delhi: Finance ministry on Friday allowed domestic companies to list and raise capital overseas without first being listed on local exchanges to boost capital inflows.Currently unlisted companies that are incorporated in India are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets.
Now unlisted companies will be allowed to raise capital abroad without the requirement of prior or subsequent listing in India.
This scheme will be implemented on a pilot basis for a period of two years from the time it is notified. After the initial two year period, the impact of this arrangement will be reviewed.
The capital raised abroad could be utilised for retiring outstanding overseas debt or for operations abroad including for acquisitions.
In case the funds raised are not utilised abroad, such companies will remit the money back to India within 15 days and such money shall be parked only in AD category banks recognised by the Reserve Bank of India.
These unlisted companies will be allowed to list abroad only on exchanges in Inter-national Organisation of Securities Commissions (IOSCO)/ Financial Action Task Force (FATF) compliant jurisdictions or those jurisdictions with which Sebi has signed bilateral agreements.
While raising resources abroad, the listing company shall be fully compliant with the foreign direct investment policy in force. The companies will have to file a copy of the return which they submit to the proposed exchange/regulators also to Sebi for the purpose of Prevention of Money Laundering Act (PMLA).
They will have to comply with Sebi’s disclosure requirements in addition to that of the primary exchange prior to the listing abroad.
Notifications in this regard will be issued by ministry of finance, Department of Industrial Policy and Promotion (DIPP) and Reserve Bank of India (RBI)in due course.
Recently the rupee has seen huge volatility due to high current account deficit. Since then the government and the Reserve Bank has taken a series of steps to increase flow of foreign funds into the country.
The government has set a target to bring the current account deficit (CAD) which touched a record high to 4.8 per cent of GDP last fiscal, to 3.7 per cent level in the current financial year.
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