Reserve Bank amends FEMA regulations for purchases of shares on international exchanges

Reserve Bank amends FEMA regulations for purchases of shares on international exchanges

The Reserve Bank has made amendments to the Foreign Exchange Management (FEMA) regulations regarding the purchase of shares of Indian companies on international exchanges. These amendments come as the government had previously permitted Indian companies to directly list their securities on international exchanges to boost foreign investments. The Ministry of Finance and the Ministry of Corporate Affairs have also introduced amendments related to the direct listing of equity shares of Indian firms on international exchanges.

In January, the government allowed Indian companies to directly list their securities on international exchanges of GIFT-IFSC (International Financial Services Centre) to encourage foreign investments. This move aimed to provide Indian firms with access to international capital markets and improve their global competitiveness.

To further facilitate this, the Reserve Bank has introduced amendments to FEMA regulations, which pertain to the purchase of shares of Indian companies on international exchanges. These amendments are aimed at streamlining the process and making it easier for Indian companies to list their securities on international exchanges.

The Ministry of Finance has also made amendments to the Foreign Exchange Management (Non-debt Instruments) Rules and notified the ‘Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme’. These amendments provide a framework for Indian companies to directly list their equity shares on international exchanges. This will enable Indian firms to raise capital from global investors, enhance liquidity, and expand their operations in international markets.

Additionally, the Ministry of Corporate Affairs has issued the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024. These rules specify the permissible jurisdictions where Indian companies can list their equity shares on international exchanges.

The announcement by the Reserve Bank regarding amendments to FEMA regulations follows Finance Minister Nirmala Sitharaman’s statement last year about the direct listing of Indian companies on GIFT-IFSC exchanges in the first phase. The GIFT-IFSC exchanges include the India International Exchange and NSE International Exchange, which are regulated by the International Financial Services Centres Authority (IFSCA).

Overall, these amendments and regulations aim to promote foreign investments in Indian companies by facilitating their direct listing on international exchanges. By allowing Indian firms access to global capital markets, these measures can help them raise funds, improve liquidity, and expand their businesses internationally.

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TIS Staff

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