Govt allows lower public float for companies listing on IFSC bourses

The government on Wednesday stipulated a 10% public shareholding requirement for companies listing on recognized stock exchanges at the International Financial Services Centre (IFSC), lower than the 25% needed for those choosing bourses elsewhere.

The move, experts said, is aimed at wooing more and more firms to list on the exchanges in IFSC, a deemed foreign jurisdiction, in Gujarat's GIFT City.

The finance ministry amended the Securities Contract (Regulation) Rules to carve out special provisions for securities listed on recognized IFSC exchanges, according to a late evening notification.


“The amendment has been brought about to encourage Indian and foreign companies to list their securities in stock exchanges located in IFSC,” said Mayank Arora, director, regulatory, Nangia Andersen India.

While companies consider several factors, including liquidity, cost of listing and regulatory environment, this amendment would “certainly nudge them to explore the option of listing” on IFSC exchanges, Arora said.

In an explanation to the rule change, the notification said: “For the purposes of this clause, the provisions of sub-clause (i) shall apply to, or in relation to, an applicant company desirous of getting its securities listed on a recognised stock exchange in an International Financial Service Centre, subject to the modification that the reference to “25%” in that sub-clause shall be construed as reference to “10%”, irrespective of the post issue capital of such company….”

This amendment will also complement the government’s January decision to allow domestic public companies to issue and list their shares directly on a couple of global exchanges housed at the sole IFSC in Gujarat’s GIFT City.

It had notified the new regulatory framework, setting the stage for Indian startup unicorns and other entities, especially those in the sunrise and technology sectors, to have easier access to a larger pool of foreign capital, experts said.

Importantly, Indian residents are not allowed to undertake share transactions on the IFSC exchanges, which are meant for only foreign investors and non-resident Indians.