While some other steps, such as, notification under Fema will have to be taken, the tougher part will be to get the revenue department on board because the amendments to the Companies Act, allowing direct overseas listing, has been a non-starter as CBDThas refused to make the required changes related to capital gains tax.For the moment, the ministry of corporate affairs has notified October 30 as the designated date for the notification under the Companies Act.
Several market participants and companies believe that after the initial rush, the government had a rethink and became reluctant in allowing foreign listing as it wanted them to first do a domestic issue. In any case, there is a section within the investment banking community, which is of the view that for Indian entities there is greater recognition and coverage in the Indian markets and some of the brands, though well known in India, will have little traction in, say, the US.
Currently, overseas listings by local listed entities are carried out through depository receipts. Some of the Indian companies have also gone ahead and done SPAC (special purpose acquisition companies) issues. Given the market turbulence over the last 18 months or so, Indian companies have preferred domestic listing.