IFSCA issues framework for listing of depository receipts

Listed companies will be required to release all the disclosures made in the home jurisdiction to the stock exchange(s) in the GIFT IFSC. DR is a negotiable certificate issued by a bank representing shares in a foreign company traded on a local stock exchange.

The International Financial Services Centres Authority (IFSCA) on Wednesday issued the regulatory framework for listing of depository receipts. The framework provides for listing of Depository Receipts (DRs) by companies that are listed in FATF-compliant jurisdictions, including India, IFSCA said in a statement.

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities. The framework enables the eligible listed companies to raise capital through issuance and listing of DRs on the stock exchanges in the GIFT IFSC, according to the statement.

Further, the framework enables eligible companies having DRs listed on any exchange in a FATF-compliant jurisdiction to list and trade such DRs on the stock exchange(s) in the GIFT IFSC as an additional venue for trading, without any fresh public offering. IFSCA has prescribed the framework for essential disclosure requirements such as financial statements, material or price sensitive information, shareholding pattern, change of depository and corporate actions, the statement said.

As per the statement, the listed companies shall continue to comply with the applicable requirements of their respective home jurisdictions with respect to corporate governance norms and several other disclosure requirements, without additional regulatory burden. Listed companies will be required to release all the disclosures made in the home jurisdiction to the stock exchange(s) in the GIFT IFSC.

DR is a negotiable certificate issued by a bank representing shares in a foreign company traded on a local stock exchange. It provides investors the opportunity to hold shares in the equity of foreign countries and gives them an alternative to trading in an international market. IFSCA was established on April 27 this year with head office in Gandhinagar.

In December 2019, Parliament passed a bill to set up a unified authority for regulating all financial activities at the IFSCs in the country. The first IFSC in the country has been set up at Gujarat International Finance Tec-City (GIFT) in Gandhinagar.