New Delhi, Sept. 27: Unlisted Indian companies will now be allowed to list and raise capital in foreign markets without prior or subsequent listing in local markets, the government said here today.
Finance minister P. Chidambaram has approved the norm in a bid to raise more dollars ahead of any measure by the US Federal Reserve to taper its bond buys.
At present, unlisted companies that are incorporated in India are not allowed to directly list in overseas markets without prior or simultaneous listing in the Indian markets.
“It has now been decided with the approval of the Union finance minister that unlisted companies may be allowed to raise capital abroad without the requirement of prior or subsequent listing in India,” the finance ministry said in a statement.
The new scheme will be implemented on a pilot basis for a period of two years from the date of notification of the scheme.
After the initial two-year period, the impact of this arrangement will be reviewed, it said.
The ministry of finance, department of industrial policy and promotion (DIPP) and the Reserve Bank of India (RBI) will issue necessary notifications in due course in order to implement the required changes to the existing rules, the statement added
The government has, however, specified that unlisted companies may be allowed to list only in those countries which are IOSCO (The International Organization of Securities Commissions) or FATF (Financial Action Task Force) compliant. Such compliance ensures that the said country is not involved in any terror funding activities.
Listing companies have to file returns not only with the foreign bourses where they are listed but also with Sebi so as to ensure that no money laundering or other illegal activities is taking place through these companies.
In case the funds raised are not used abroad, these firms have to remit the money back to India within 15 days and park it in RBI recognised institutions.