Navigating the New Rules: Listing of Equity Shares in Permissible Jurisdictions

In a move aimed at bolstering the regulatory framework for listing equity shares, the Ministry of Corporate Affairs (MCA) has recently introduced the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, which came into immediate effect.

Under these rules, the term "Permissible Jurisdiction" refers to the International Financial Services Centre in India, while "Permitted Stock Exchange" encompasses the India International Exchange and NSE International Exchange.

?Applicability of the Rules:

1. The rules apply to: Unlisted public companies. Listed public companies, subject to compliance with regulations or directions issued by the Securities and Exchange Board of India (SEBI) or the Authority.
2. Certain companies are ineligible to issue equity shares for listing under these rules, including Section 8 companies, Nidhi companies under Section 406 of the Companies Act, 2013, and companies with negative net worth or outstanding public deposits.
3. Companies with defaults in payment obligations or pending winding-up proceedings are also excluded, along with those failing to file annual returns or financial statements within the prescribed timelines.

?Procedures for Eligible Companies:

1. Eligible public companies without partly paid-up shares can issue equity shares for listing on a permitted stock exchange in a permissible jurisdiction. They must file the prospectus in e-Form LEAP-1 within seven days of finalization and filing with the permitted exchange.
2. Post-listing, companies must adhere to Indian Accounting Standards (IND-AS) for financial statement preparation, alongside any other applicable accounting standards.

?Additional Compliance Requirements:

1. Unlisted public companies seeking listing on permitted stock exchanges and intending to list with recognized exchanges must comply with SEBI-specified conditions.

The introduction of these rules underscores the MCA's commitment to enhancing transparency and accountability in the listing process while promoting investor confidence. It provides a structured framework for companies seeking to list their equity shares in permissible jurisdictions, ensuring adherence to regulatory standards and fostering a conducive environment for capital market growth.

It's imperative for companies to familiarize themselves with these rules and ensure compliance to navigate the evolving regulatory landscape effectively. As businesses embrace opportunities in international markets, adherence to regulatory requirements becomes paramount for sustainable growth and success.

In conclusion, the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, represent a significant milestone in the regulatory landscape, empowering companies to explore listing opportunities while upholding the highest standards of corporate governance and transparency.

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