Direct Listing on IFSC Exchanges: What an Indian Company Must Satisfy

For decades, Indian companies seeking to raise equity capital abroad relied on depository receipts rather than listing their equity shares directly on foreign exchanges. This changed in January 2024, when India introduced a direct listing framework for eligible Indian companies on GIFT IFSC exchanges. However, the framework remains limited in scope, with eligibility conditions and regulatory requirements determining which companies can use this route. Understanding who qualifies, which rules apply and what restrictions remain is essential before pursuing a direct listing.

The Architecture: Three Instruments

ndia’s direct listing framework, introduced on 24 January 2024, rests on three key legal instruments governing the listing of Indian companies’ equity shares on GIFT IFSC exchanges.

1. Companies Act, 2013, section 23(3), the enabling provision permitting prescribed classes of public companies to issue securities for listing on permitted stock exchanges in permissible foreign jurisdictions;
2. the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, made by the Ministry of Corporate Affairs; and
3. the Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme, inserted as Schedule XI to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, together with a new rule 34 permitting a “permissible holder” to purchase or sell such shares.

The Annexure to the Scheme lists the international exchanges: the exchanges in the International Financial Services Centre in India, namely India International Exchange and NSE International Exchange. The permitted destination, in other words, is GIFT IFSC.

Who May Use it Today

The Rules apply to unlisted public companies, and to listed public companies “so far as they are in accordance with regulations framed or directions issued” by SEBI or IFSCA.

The Scheme repeats the division. A listed Indian company may issue or its shareholders may offer equity shares on an international exchange “subject to compliance with the conditions and other requirements as per the norms notified by the Securities and Exchange Board of India from time to time”. An unlisted public company’s route is subject to the norms notified by the Ministry of Corporate Affairs, which are the 2024 Rules.

This is the single most important practical point. The unlisted-company route is operational; the listed-company route depends on a SEBI framework. Reporting as recent as 28 February 2026 records that exchanges in the IFSC were still awaiting SEBI’s operating guidelines for listed companies. No notified SEBI framework for direct listing by already-listed Indian companies was traced as at 17 September 2026. A listed company contemplating the route should treat the position as not yet operative and confirm the current status.

A related but distinct development should be noted. On 13 July 2026 IFSCA issued a consultation paper proposing a regulatory framework for the direct listing of specified securities (equity shares and convertible securities) without a public offer on IFSC exchanges, under regulation 40 of the IFSCA (Listing) Regulations, 2024. It covers eligibility, the information document and minimum public shareholding. It is a proposal, not operative law. It does not supply the missing SEBI framework for already-listed Indian companies. As at 15 October 2026 no final IFSCA framework had been issued: IFSCA’s listing of instruments issued to 12 October 2026 shows none, and IFSCA officials indicated at the end of September 2026 that a framework was expected within months.

Eligibility: The Negative List

Under Rule 5 of the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, certain companies are ineligible for direct listing on GIFT IFSC exchanges. A company cannot issue equity shares for listing in a permissible jurisdiction if it:

• is registered under section 8 of the Companies Act or declared a Nidhi under section 406;
• is a company limited by guarantee that also has share capital;
• has outstanding deposits accepted from the public under Chapter V;
• has a negative net worth;
• has defaulted in payment of dues to any bank, public financial institution, non-convertible debenture holder or other secured creditor, unless the default has been made good and two years have passed;
• has applied for winding up under the Act or for resolution or winding up under the Insolvency and Bankruptcy Code, 2016, or has such proceedings pending against it; or
• has defaulted in filing its annual return under section 92 or financial statements under section 137 within the specified period.

The Scheme adds conduct-based conditions: neither the company nor its promoters, promoter group, directors or selling shareholders may be debarred from accessing the capital market; no promoter or director may be a promoter or director of another Indian company that is so debarred; the company and its promoters and directors must not be wilful defaulters; the company must not be under inspection or investigation under the Companies Act; and no promoter or director may be a fugitive economic offender. Past debarment that has expired by the date of listing does not disqualify.

Who May Hold the Shares

The Scheme creates the concept of a “permissible holder”: a holder, including a beneficial owner, of equity shares listed on an international exchange, expressly not a person resident in India. A holder who is a citizen of a country sharing a land border with India, an entity incorporated in such a country, or an entity whose beneficial owner is from such a country, may hold such shares only with Central Government approval. The permissible holder and its beneficial owner must ensure compliance, and the company must disclose this in its offer document.

A permissible holder may buy or sell such shares subject to the foreign portfolio investment limits under the NDI Rules. The company must ensure that the aggregate of shares issued or offered in the permissible jurisdiction, together with shares already held in India by persons resident outside India, does not exceed the foreign-holding limit under Schedule I of those Rules. Sectoral caps and prohibited-sector restrictions apply, and prior Government approval must be obtained where applicable.

Shares, Pricing and Voting

Form and ranking. Shares issued or offered must be in dematerialised form and rank pari passu with equity shares listed on a recognised stock exchange in India.

Pricing. Where shares are issued by a listed company, or offered by existing shareholders of shares listed in India, the price must not be less than the price applicable to a corresponding domestic mode of issuance. For an initial listing by an unlisted public company, the price is determined by a book-building process as permitted by the international exchange, and must not be less than fair market value under FEMA rules. Subsequent issues or transfers after the initial listing follow the pricing norms of the international exchange and the permissible jurisdiction.

Voting. Voting rights on such shares must be exercised directly by the permissible holder, or through the custodian acting only on that holder’s voting instructions.

Continuing Obligations

Two continuing obligations deserve board attention.

Filing in India. Under rule 4(4), the unlisted public company must file the prospectus in e-Form LEAP-1, with fees, within seven days after it is finalised and filed with the permitted exchange.

Accounting standards. Under rule 4(5), after listing, the company must comply with Indian Accounting Standards under the Companies (Indian Accounting Standards) Rules, 2015 in preparing its financial statements, in addition to any other accounting standard required for statements filed with the securities regulator or exchange concerned. A company that expected to move wholly to IFRS for its IFSC listing will therefore run two reporting frameworks.

The Scheme also requires compliance with the wider Indian legal framework, including the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, the Depositories Act, 1996, FEMA, the Prevention of Money-laundering Act, 2002 and the Companies Act, and contemplates arrangements between the company, the Indian depository and the foreign depository.

Alongside these, the listing itself is governed on the IFSC side by IFSCA’s listing framework, which sets the disclosure and continuing-obligation requirements of the exchange.

What to Weigh Before Committing

• Confirm the route is open to you. If the company is already listed in India, the SEBI framework is the gating item.
• Run the negative list early. Several disqualifications, such as defaults or delayed filings, can be cured but require time, and one requires a two-year clean period.
• Model the foreign-holding headroom, since the listed shares count towards the same sectoral and aggregate limits as other foreign investment.
• Plan dual accounting, because Ind AS compliance continues after the international listing.
• Check the shareholder base against the land-border approval requirement, which applies at the level of beneficial ownership.

Frequently Asked Questions

1. Can Indian companies list shares directly on foreign exchanges?

Yes. Eligible Indian public companies can list equity shares on permitted exchanges in GIFT IFSC, subject to applicable rules.

2. Can an already-listed Indian company use the direct listing route?

The route depends on the applicable SEBI framework, which must be confirmed before proceeding.

3. Which exchanges permit direct listing under the 2024 framework?

The framework identifies India International Exchange (India INX) and NSE International Exchange (NSE IX) in GIFT IFSC.

4. Which companies are ineligible for direct listing on GIFT IFSC exchanges?

Certain companies, including Section 8 companies, Nidhis, companies with negative net worth and companies meeting specified default or insolvency conditions, are excluded.

5. Must companies comply with Indian accounting standards after listing?

Yes. Eligible unlisted public companies must continue complying with applicable Indian Accounting Standards (Ind AS) after listing.