Sebi panel for Indian cos' direct listing on foreign bourses; vice versa

New Delhi: A high-level panel Tuesday recommended market regulator Sebi to allow direct listing of Indian companies on overseas bourses and of foreign firms on Indian exchanges. Currently, Indian companies can list their shares through depository receipts abroad, while foreign companies need to go through the Indian Depository Receipt route for listing of equities.

Moreover, Indian firms can list their debt securities directly on international exchanges through a security instrument known as 'Masala Bonds'. In its 26-page report, the committee has suggested for direct listing of Indian companies overseas and vice versa. It has recommended that the framework should allow listing only on specified stock exchanges in 'Permissible Jurisdictions'.

Permissible Jurisdiction, includes a jurisdiction which has treaty obligations to share information and cooperate with Indian authorities in the event of any investigation. Equity listings by companies incorporated in India on foreign stock exchanges would allow them to access foreign capital at a lower cost. The Indian economy, in turn, will experience added growth and economic development.

Similarly, equity listings of companies incorporated outside India on Indian bourses would improve the efficient allocation of capital and diversification for investors across the Indian economy. The panel has suggested, "listing of equity shares of unlisted companies incorporated in India on foreign stock exchanges would be governed by the listing framework of the concerned Permissible Jurisdiction. The relevant Indian laws like Companies Act would also continue to apply to such companies".

The KYC (Know your client) and AML (anti-money laundering) framework existing in Permissible Jurisdictions should be taken as acceptable standards for compliance. The Securities and Exchange Board of India (Sebi) has sought comments from public till December 24 on the recommendations of the committee.

The committee was set-up by Sebi in June to look into details of facilitating companies incorporated in India to directly list their equity shares on foreign stock exchanges and firms incorporated outside India to list on Indian bourses.

The panel was entrusted to look into various legal, operational and regulatory constraints as well as examine in detail the economic case for permitting direct listing of Indian firms overseas and vice versa. The expert committee have nine members including Avendus Capital Managing Director Ranu Vohra, Amarchand Mangaldas Managing Partner Cyril S Shroff, Kotak Investment Banking Managing Director and CEO S Ramesh, MakeMyTrip.com Chairman & Group CEO Deep Kalra and Zodius Capital Advisors Senior Managing Director & CEO Neeraj Bhargava.

Morgan Stanley Managing Director (Technology, Media and Telecom Banking) Kamal Yadav, Latham & Watkins LLP Partner Rajiv Gupta and KPMG and LLP Global Head of Accounting Advisory Services Jamil Khatri are also part of the panel. Sebi Executive Director Surjit Prasad was the convenor of the committee.

Meanwhile, HDFC AMC and HDFC Trustee Company on Tuesday settled a case with securities market regulator Sebi related to alleged violation of mutual fund norms after paying Rs 3.78 crore towards settlement fee. The Securities and Exchange Board of India (Sebi) agreed to settle proposed adjudication proceedings in the case after it was approached by the two entities with a plea under the settlement regulations.

Under the settlement norms, an entity is allowed to settle charges by paying a penalty without admission or denial of guilt. "The pending adjudication proceedings initiated against noticee... is disposed of," Sebi said in settlement orders.

The regulator had initiated adjudication proceedings against HDFC Asset Management Company and HDFC Trustee Company in April for alleged violations of several provisions of mutual fund regulations. Both firms submitted separate applications with Sebi to settle the case on payment of settlement charges.

Thereafter, the Sebi's advisory committee recommended the case for settlement upon the payment of Rs 3.78 crore. This was also approved by the regulator's panel of whole-time members, following which they remitted the amount.

Accordingly, the regulator has disposed of the adjudication proceedings initiated against the both entities. Earlier in July, the regulator had directed HDFC AMC, the country's second largest mutual fund house, to cancel the shares allotted to distributors and advisers ahead of its IPO, officials had said.