IFSCA releases final norms for Gift City listings, sets IPO eligibility

The International Financial Services Centres Authority (IFSCA) has released its final guidelines outlining the eligibility criteria and regulations for companies seeking to list on the exchanges in GIFT City. With these finalized norms, the IFSCA opens the door for foreign entities and domestic unlisted companies, particularly startups targeting offshore investors, to explore listing opportunities in this financial hub.

To qualify for listing, a company must have generated at least $20 million in operating revenue in the previous fiscal year, achieved a pre-tax profit of at least $1 million, and have a post-issue market capitalization of at least $25 million. Additionally, companies that have previously issued shares with superior voting rights (SR equity shares) may also launch an IPO of ordinary shares, provided the SR equity issuance was approved by shareholders and held for at least three months prior to filing. For offers for sale, shares must have been held for a minimum of one year before submitting the draft documents.

"The finalized regulations allow unlisted entities and Special Purpose Acquisition Companies (SPACs) to issue initial public offerings on IFSC stock exchanges. They also permit listed entities to issue follow-on public offers, rights issues, or preferential issues," stated Sunil Gidwani, Partner - Financial Services at Nangia Andersen LLP. Furthermore, the regulations facilitate the listing of various securities, including depository receipts, debt securities, commercial papers, certificates of deposit, and other financial instruments approved by the IFSCA.

For SPACs, the IFSCA has mandated that the issue size must be at least $50 million or as otherwise specified by the authority. Sponsors are required to hold a minimum of 15% and a maximum of 20% of the post-issue paid-up capital.

While the IFSCA regulations allow the listing of a broad range of securities, existing SEBI regulations will need to be amended for already listed companies to list in GIFT City. The regulations mention that an Indian public company with equity shares listed on a domestic stock exchange may be allowed to conduct a qualified institutions placement, subject to the Authority's specifications.

Most processes outlined in the final norms align with those in the domestic market, including the appointment of a lead manager and necessary disclosures. Notably, the IFSCA has committed to issuing observations on draft IPO documents within 21 days, with provisions for fast-tracking follow-on public offers (FPOs) if certain criteria are met. Experts believe that these timelines are designed to ensure faster processing and contribute to building a robust financial ecosystem.

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