The Indian government has made a rather profound change to the minimum public float norm for companies planning to go for a listing of securities with stock exchanges in GIFT City, Gujarat. The Finance Ministry on Thursday said companies can float with at least 10% of public shareholding from a previous stipulation of 25%. This revision makes the list criterion in GIFT City to be comprehensive with the current international standards thus providing a better playing ground for Indian businesses.
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Let us now ponder upon what will this mean for the Indian Companies
This adjustment is expected to benefit Indian companies, especially the sunrise and the technology-oriented firms, which will have better access to the international money markets. This the experts think is a strategic approach towards advancing India in the global financial chain. With these revised limits, the companies using AIF can consider their International Listing within the IFSC such as GIFT City without falling prey to stringent regulation in India.
Amendments to Securities Contracts Regulation Rules ( SCRR),1956
To enable this change, the DEA has altered the Securities Contracts Regulation Rules of 1956 by introducing certain changes which are discussed next. This amendment is intended to facilitate the listing of Indian start-ups and expanding enterprises on international exchanges in IFSCs for instance GIFT City. It liberalises the Indian listing regulations to make it conform better with international listing standards hence making it more appealing to any organisation that has plans to expand internationally.
Implications For Indian Startups What Are the Implications for Indian Start-ups?
As per the DEA, the changes to the SCRR will be highly favourable to Indian companies which are operating abroad. The improved availability of foreign funds is to assist a considerable enhancement desirable by organizations in the sunrise and technology sectors, which tend to make large investments to expand hurriedly.
The Government’s Clemency to GIFT-IFSC
This action has come at the back of a set of reforms enacted to have GIFT City propel global financial transactions. Earlier in the year, January to be precise the Central Government also released regulations that would allow Public Indian Companies to list within the GIFT-IFSC regime. This latest amendment is a continuation of these efforts and well as serves to again reduce the thresholds for companies that wish to access international capital.
What’s Next?
The International Financial Services Centres Authority (IFSCA) in May itself came out with a consultation paper on further regulatory measures and sought public feedback. This could imply that fine-tuning the nature of regulations in GIFT City might be possible in the future, thereby turning the area into a highly favorable location for global and India-based firms.
Reduction of the minimum public shareholding is a major milestone towards enhancing GIFT City’s capability in the international financial competitive environment. This is expected to enhance the capacity of more firms to consider listing in GIFT City hence improving their chances of global expansion.
