Govt to allow unlisted Indian companies to raise capital abroad

The finance ministry has decided to allow unlisted Indian companies to list and raise capital abroad without having to get listed in India, for a period of two years, on a pilot basis.

At present, unlisted companies incorporated in India are not allowed to directly list in overseas markets without prior or simultaneous listing in Indian markets.

Union finance minister P Chidambaram has now approved a proposal to allow unlisted companies to raise capital abroad without the requirement of prior or subsequent listing in India.

This scheme will be implemented on a pilot basis for a period of two years from the date of its notification. After the initial two-year period, the impact of this arrangement will be reviewed, a finance ministry statement said on Friday.

The approval to list abroad is subject to the following conditions:

• Unlisted companies may be allowed to list abroad only on exchanges in International Organisation of Securities Commissions (IOSCO) / Financial Action Task Force (FATF) compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements;
• The companies should file a copy of the return which they submit to the proposed exchange / regulators also to SEBI for the purpose of Prevention of Money Laundering Act (PMLA).
• They should comply with SEBI's disclosure requirements in addition to that of the primary exchange prior to the listing abroad;
• While raising resources abroad, the listing company should be fully compliant with the FDI policy in force;
• The capital raised abroad may be utilised for retiring outstanding overseas debt or for operations abroad, including for acquisitions; and
• In case the funds raised are not utilised abroad as stipulated above, such companies should remit the money back to India within 15 days and such money should be parked only in AD category banks recognised by RBI.

The finance ministry, the department of industrial policy and promotion (DIPP) and the Reserve Bank of India would be issuing the necessary notifications in due course in order to implement the required changes to the existing rules, according to the official release.