Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules) have been amended by MoF vide notification dated 24 January 2024 to permit direct listing of shares by eligible Indian companies on permissible international stock exchanges in Gujarat International Finance Tec-City - International Financial Services Centre (GIFT- IFSC) in India.

A new chapter and a new schedule pertaining to direct listing of equity shares of companies incorporated in India on international exchanges scheme (Direct listing scheme) introduced under the amended NDI Rules.

The key highlights of the Direct listing scheme are provided below:

• Eligibility: Public Indian companies (listed and unlisted) for issuance of fresh equity shares or offer for shares by existing shareholders.
  
• Issue and listing of equity shares shall be in dematerialized form ranking pari-passu with existing equity shares.
• Presently, the permissible international exchanges are the stock exchanges in GIFT-IFSC i.e., India international exchange and NSE international exchange.
  
• Permissible holder/investors: any person resident outside India in terms of Foreign Exchange Management Act, rules and regulations made thereunder (FEMA). In case the Permissible holder is a citizen or an entity/beneficial owner of a country which shares land border with India, prior Government approval is required.
  
• Further, the issuance is subject to compliance with specific conditions, prohibited activities, and sectoral cap. The foreign investment shall not exceed prescribed limits under NDI Rules.
  
• Pricing:
  Listed public company: shall not be less than the price offered to domestic investors
  Unlisted public company: Issue price for initial listing of equity shares shall not be less than fair market value under NDI Rules.
• Subsequent issuance and transfer of equity shares for the purpose of additional listing shall be as per applicable pricing norms of the international exchange and the permissible jurisdiction.
  
• Additionally, compliance with other applicable laws i.e., Companies Act, 2013, Securities Exchange Board of India, 1999, Depositories Act, 1996 etc., would be required by the eligible Indian companies.
  

Source: Gazette Notification issued by Ministry of Finance dated 24 January 2024