Eligible Companies May Soon List Shares Without an IPO as GIFT City Moves Closer to Becoming a Global Financial Hub

India's ambition to position GIFT City among the world's leading international financial centres has received a significant boost with the International Financial Services Centres Authority (IFSCA) proposing a comprehensive framework that would allow eligible companies to directly list their equity shares on GIFT City stock exchanges without launching an Initial Public Offering (IPO).

The proposed framework offers an alternative pathway for mature companies that have already secured adequate funding from founders, private equity firms or institutional investors but wish to access public markets for greater visibility, improved governance and liquidity for existing shareholders.

If implemented, the initiative would align GIFT City with major international exchanges such as the New York Stock Exchange (NYSE), Nasdaq, London Stock Exchange (LSE) and Tokyo Stock Exchange, where direct listings have become an increasingly popular capital market mechanism.

The proposal also strengthens India's long-term strategy of transforming GIFT City into a globally competitive destination for international finance, cross-border investments and capital market innovation.

A New Route to Public Markets

Traditionally, companies seeking stock market listing raise fresh capital through an IPO by issuing new shares to investors.

However, many high-growth companies today are well-capitalised through venture capital, private equity and institutional funding, reducing the need for immediate fundraising.

For such businesses, direct listing provides an efficient alternative that enables them to:

• Become publicly traded.

• Establish transparent market valuation.

• Provide liquidity to existing shareholders.

• Enhance corporate visibility.

• Improve governance standards.

• Expand access to institutional investors.

Unlike an IPO, no fresh equity issuance is required under the proposed framework.

Eligibility Criteria for Direct Listing

The IFSCA has proposed clear financial thresholds to ensure only established companies qualify for direct listing.

A company that is not already listed on any domestic or overseas exchange may apply if it satisfies at least one of the following conditions.

Proposed Financial Eligibility

The eligibility framework aims to attract financially stable companies while maintaining investor confidence and market quality.

Designed for Mature Businesses

The proposed regulations primarily target companies that have reached a stage where public listing is desirable, even if additional fundraising is not immediately necessary.

Potential beneficiaries include:

• Technology companies

• SaaS businesses

• FinTech firms

• Manufacturing companies

• Family-owned enterprises

• Private equity-backed firms

• Venture-funded startups preparing for public markets

These companies can achieve public market visibility without diluting ownership through fresh share issuance.

Global Capital Market Practices Come to India

Direct listing has gained increasing acceptance across major global financial centres.

International exchanges including:

• New York Stock Exchange

• Nasdaq

• London Stock Exchange

• Tokyo Stock Exchange

already permit eligible companies to list without conducting traditional IPOs.

By introducing a similar framework, India is aligning GIFT City's regulatory ecosystem with internationally accepted capital market practices.

This enhances GIFT City's competitiveness as a destination for global listings.

Support for Founder-Led Companies

One of the notable features of the proposal is the inclusion of companies with Superior Voting Rights (SR Shares).

Many technology startups issue SR shares to allow founders to retain strategic control while raising external capital.

Under the proposed regulations:

• SR shares must have received shareholder approval.

• They must be held for at least three months before filing for listing.

This provision is expected to make GIFT City particularly attractive for innovation-driven businesses.

Fast-Track Approval Process

The proposed framework introduces a simplified and time-bound approval mechanism aimed at reducing delays.

Proposed Listing Process

1. Submit application to recognised exchange.

2. Obtain in-principle approval within 15 days.

3. File an Information Document.

4. Receive certification from a registered investment banker.

5. Complete listing process.

6. Begin trading through exchange price discovery.

The streamlined timeline could significantly reduce the time required for companies to access public markets.

Robust Disclosure Requirements

Although companies will not issue fresh shares, investor protection remains a central feature of the proposal.

The Information Document must contain comprehensive disclosures covering:

• Business overview

• Financial performance

• Risk factors

• Shareholding pattern

• Capital structure

• Management profile

• Litigation

• Related-party transactions

• Corporate governance practices

These disclosures are intended to provide investors with information comparable to that available during traditional IPOs.

International Accounting Standards Mandatory

To attract global institutional investors, the IFSCA has proposed internationally accepted financial reporting standards.

Companies may prepare financial statements under:

• IFRS

• US GAAP

• Indian Accounting Standards (Ind AS)

• Equivalent globally recognised accounting frameworks

Where different accounting standards are used, reconciliation requirements will ensure transparency and comparability.

Public Shareholding Requirements

The framework also prescribes minimum public ownership norms.

Indian Companies

Domestic issuers must comply with India's existing minimum public shareholding regulations.

Foreign Companies

International issuers must maintain a minimum 10% public float after listing.

Adequate public ownership is expected to improve market liquidity and facilitate efficient price discovery.

Independent Valuation to Determine Listing Price

Unlike IPOs, direct listings do not involve book building or subscription-based price discovery.

Instead, companies must obtain an independent valuation report that is no older than three months.

The valuation will serve as the basis for determining the initial reference price before trading begins.

This mechanism seeks to balance market efficiency with investor confidence.

Special Pre-Open Session for Price Discovery

On the first day of trading, exchanges will conduct a dedicated pre-open session.

This process allows buy and sell orders to determine the equilibrium market price before regular trading commences.

To improve liquidity, companies may also appoint market makers who facilitate continuous trading and reduce price volatility during initial sessions.

Strengthening GIFT City's Global Position

The proposal supports India's broader strategy of developing GIFT City into a leading international financial centre capable of competing with established global jurisdictions.

Potential benefits include:

• Higher number of international listings.

• Increased foreign institutional participation.

• Greater cross-border capital flows.

• Enhanced market liquidity.

• Improved financial innovation.

• Broader investment opportunities.

• Expansion of India's global financial footprint.

As more companies choose GIFT City for listing, the ecosystem could attract greater interest from global investors, investment banks and financial intermediaries.

Opportunities for Indian Startups

India's rapidly growing startup ecosystem could become one of the biggest beneficiaries of the framework.

Many venture-backed startups already possess sufficient capital but seek:

• Liquidity for early investors.

• Market-based valuation.

• Improved corporate governance.

• International investor access.

• Brand visibility.

Direct listing provides an attractive alternative to traditional IPOs while preserving capital for future growth initiatives.

Challenges Ahead

While the proposal offers significant advantages, certain practical considerations remain.

These include:

• Investor awareness of direct listings.

• Liquidity during initial trading.

• Valuation accuracy.

• Market maker participation.

• Cross-border regulatory coordination.

• International investor adoption.

Successful implementation will depend on effective market infrastructure and strong investor participation.

Investment Perspective

The proposed direct listing framework represents a transformational development for India's international capital markets. By expanding listing options beyond conventional IPOs, the IFSCA is creating greater flexibility for businesses while improving GIFT City's attractiveness to global issuers and institutional investors.

For market participants, the framework could unlock access to a wider range of mature, high-growth companies entering public markets without fresh equity dilution. It also reinforces India's commitment to adopting global financial best practices and strengthening its position as an emerging international financial hub.

Outlook

The IFSCA's proposed direct listing regulations have the potential to reshape India's capital market landscape by offering companies a faster, more efficient route to public markets. As GIFT City continues evolving into an international financial services centre, initiatives such as direct listings are expected to attract high-quality domestic and overseas businesses seeking global visibility, transparent price discovery and access to international investors.

If implemented following public consultation, the framework could significantly enhance GIFT City's competitiveness, deepen India's capital markets and accelerate the country's emergence as a global financial destination capable of competing with the world's leading stock exchanges.