Issuance and listing of securities by Start-ups, SMEs and SPAC notified via International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021

On July 16, 2021, the International Financial Services Centres Authority makes International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021. The Regulations are further divided in 13 Chapters and 184 Regulations.

 

I. Applicability: The Regulations are applicable on

  • an initial public offer of specified securities by an unlisted issuer;
  • a followon public offer of specified securities by a listed issuer;
  • listing of specified securities by a startup company or an SME company;
  • secondary listing of specified securities;
  • an initial public offer of specified securities by a Special Purpose Acquisition Company;
  • rights issue and/or preferential issues by a listed issuer;
  • listing of depository receipts;
  • listing of debt securities;
  • listing of ESG debt securities; and
  • issuance and/or listing of any other securities as may be specified by the Authority from time to time.

 

II. General Eligibility Criteria: The following entities shall be eligible to list its securities under these regulations on a recognised stock
exchange:

  • A company incorporated in an IFSC;
  • A company incorporated in India; and
  • A company incorporated in a Foreign Jurisdiction.

 

III. Public Offer of Specified Securities

An issuer shall be eligible to make an initial public offer only if:

  • the issuer has an operating revenue of at least USD 20 million in the preceding financial year; or
  • the issuer has an average pretax profit, based on consolidated audited accounts, of at least USD one million during the preceding three financial years; or
  • any other eligibility criteria that may be specified by IFSCA.

IV. Listing of Start-Up and SME Companies

The Chapter provides eligibility criteria for a start up company to list its specified securities on a recognised stock exchange, with or without making a public offer, if it meets the following criteria:

  • The offer document of the company should be filed within a period of ten years from the date of incorporation/ registration;
  • The annual turnover of the company for any of the financial years since incorporation/ registration should not have exceeded USD twenty million; and
  • The company is working towards innovation, development or improvement of products or processes or services, or it is a scalable business model with a high potential of employment generation or wealth creation.

V. Secondary Listing of Specified Securities

The Chapter provides requirements for listing without public offer or with public offer .

Listing without Public Offer:

Any company which is having its specified securities listed in India (outside IFSC) or in a Foreign Jurisdiction may list its specified securities on a recognised stock exchange(s), without public offer, subject to the following conditions.

  • The company shall file listing application, in the manner specified by the stock exchange(s); and
  • The company shall comply with the listing requirements of the stock exchange(s) and other conditions as may be specified by IFSCA.

Listing with Public Offer

Any company which is having its specified securities listed in India (outside IFSC) or in a Foreign Jurisdiction may list its specified securities on a recognised stock exchange(s) by undertaking public offer.

VI. Listing of Special Purpose Acquisition Companies

This chapter provides Eligibility criteria for a Special Purpose Acquisition Company issuer to raise capital through initial public offer of specified securities on the recognised stock exchange(s), only if:

  • target business combination has not been identified prior to the IPO; and
  • The SPAC has the provisions for redemption and liquidation in line with these Regulations.

A sponsor of the SPAC issuer shall have a good track record in SPAC transactions or business combinations or fund management or merchant banking activities, and the same shall be disclosed in the offer document.

Note: Sponsor shall mean a person sponsoring the formation of the SPAC and shall include persons holding any specified securities of the SPAC prior to the IPO.

VII. Rights Issues and Preferential Issues

A company listed on a recognised stock exchange may issue rights issues or preferential issues of specified securities, subject to compliance with the requirements that may be specified by the recognised stock exchange(s) and the Authority from time to time.

VIII. Listing of Depository Receipts

The chapter provides eligibility requirements for a  company incorporated in India (outside IFSC) or a Foreign Jurisdiction  to make an issue of depository receipts only if

  • the issuer is authorised to issue depository receipts; and
  • the issuance of depository receipts by the issuer is in accordance with the applicable laws of its home
    jurisdiction.

The depository receipts shall be eligible to list only if the underlying securities which the depository receipts
represent are:

  • freely transferable, in dematerialised form and rank pari passu with the existing securities of the same class;
  • fully paid and free from all liens; and
  • (c) listed or will be listed in the home jurisdiction of the issuer before listing of depository receipts on stock exchange(s).

IX. Listing of Debt Securities

The Chapter provides eligibility criteria for debt securities for listing on a recognised stock exchange:

  • Debt securities issued by an issuer incorporated in IFSC;
  • Debt securities issued by an issuer incorporated in India or a Foreign Jurisdiction in any currency other than INR;
  • Debt securities issued by a supranational, multilateral or statutory organisation/ institution /agency;
  • Debt securities issued by any municipality or any statutory body or board or corporation, authority, trust
    or agency established or notified by any Central or State Act or any special purpose vehicle notified by
    the State Government or Central Government including for the purpose of raising fund by the issuer to
    develop infrastructure or SMART city;
  • Debt securities irrevocably guaranteed by a Sovereign (India or a Foreign Jurisdiction);
  • Masala bonds;
  • Any other debt securities as may be permitted by IFSCA from time to time.

The provisions relating to issuance and listing of specified securities and debt securities specified under Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015 shall stand superseded on the commencement of 2021 Regulations.

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