SEBI constitutes Expert Committee frame rules for direct listing of Indian firms abroad

The market regulator Securities and Exchange Board of India (Sebi) has constituted an expert committee to recommend suitable framework to allow direct listing of Indian companies overseas bourses while also allowing overseas companies to list directly on Indian bourses.

Terms of Reference of the Committee

The committee will examine in detail economic case for permitting direct listing of Indian companies overseas and vice versa. It will also examine various legal, regulatory and operational constraints in facilitating companies incorporated in India to directly list their equity share capital abroad and vice versa. The committee will also make recommendations for a suitable framework in which to facilitate such direct listing.

Background

Currently, Indian companies can only use the depository receipts route – Global Depository Receipts (GDR) or American Depository Receipts (ADR) – to list on the overseas exchanges. Similarly, foreign companies can access Indian capital markets only through Indian Depository Receipts (IDRP) for listing of equities. But there has been demand for facilitating companies incorporated in India to directly list their equity share capital abroad and vice versa considering evolution and internationalisation of the capital markets.

Securities and Exchange Board of India (SEBI)

SEBI is statutory regulator for securities market in India established in 1988. It was given statutory powers through tSEBI Act, 1992. Its mandate is to protect interests of investors in securities, promote development of securities market and to regulate securities market. It is headquartered in Mumbai, Maharashtra.
SEBI is responsive to needs of three groups, which constitute market, issuers of securities, investors and market intermediaries. It has three functions quasi-legislative (drafts regulations in its legislative capacity), quasi-judicial (passes rulings and orders in its judicial capacity) and quasi-executive (conducts investigation and enforcement action in its executive function).

Month: Current Affairs - June, 2018