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Overseas Direct Listing
Direct Overseas Listing Of Indian Companies

CORPORATE CAPITALVENTURES PRIVATE LIMITED
SEBI Registered Category I Merchant Banker

A Brief On Overseas Listing

At present, Indian companies can access the overseas equity markets only through depository receipts (e.g. American Depository Receipts or Global Depository Receipts regime) or by listing their debt securities (such as, foreign currency convertible bonds, masala bonds, etc.) on foreign markets. On the stock exchanges of the United States, for instance, a company may list its shares through a public offering, inviting American investors to subscribe to its shares, or through ‘direct listing’, by merely joining a stock exchange without raising capital.

Advantages Of Overseas Listing

Besides the obvious advantage of having access to an abundant alternative source of capital, overseas listing provides other advantages to Indian companies.
Better Valuation
Broader Investor Base
Global Brand Recognition
Alternate Source of Foreign Currency
International Expansion
Better Corporate Governance

Indian Co. Listed Overseas

Company National Stock Exchange (INR) NYSE (USD)
Infosys 800 10.47
HDFC 1080.25 47.02
ICICI 353.6 9.43
Dr. Reddy 3898 51.39

Indian Law Related To Overseas Listing

  • Companies Act, 2013
  • COMPANIES (AMENDMENT) BILL, 2020
  • Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004;
  • Foreign Exchange Management (Deposit) Regulations, 2016;
  • Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017;
  • SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018;
  • SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015;
  • Other related SEBI Regulations.

Companies (Amendment) Bill, 2020

Before the bill
    1. Indian companies used to list overseas only through depository receipts 2. Companies to get listed overseas had to have at least 10% of the paidup capital be listed on Indian stock exchanges, the issue size set at a minimum of Rs.1,000 crore, and allotment made to at least 200 investors 3. They were also allowed to list their debt securities on foreign stock exchanges directly through masala bonds and foreign currency convertible bonds.
About the Bill
The Government of India, on 17 March 2020, introduced the Companies (Amendment) Bill, 2020 (Bill) in the Lok Sabha that provide for Indian companies to list securities directly on overseas stock exchanges.
After the bill
    1. Indian companies after the bill can get directly listed on the foreign stock exchange. 2. This will help Indian companies get access to multiple jurisdictions for raising capital, with differing costs and listing conditions. 3. This will also help Indian companies to get higher valuation
The corporate affairs ministry and SEBI is yet to announce norms on the types of companies that can list overseas.

Japan Stock Exchange

Requirements For Indian Companies For Listing On Stock Exchange In Japan

There are two types of requirements :


Formal
Requirement

Eligibility Requirements


TSE examines the company, which meets “Formal Requirements” and conducts an examination on in under “Eligibility Requirements.”

Formal Requirements

Overseas Direct Listing of Indian Companies

Eligibility Requirements

Direct Listing

Listing Fees For First And Second Section

Listing examination fee: JPY 4 million
Initial listing fee:
  • JPY 15 million (First Section);
  • JPY 12 million (Second Section).
Public offering / sales fee:
  • Number of offered shares x the offering price of new shares x 0.0009;
  • Number of existing shares offered x offering price x 0.0001.
Annual listing fee:
  • JPY 0.96 to 4.56 million (First Section);
  • JPY 0.72 to 4.32 million (Second Section).

Taxation Policy

Taxes Rate
Corporate income tax rate 23.2% (30%-34% including local taxes)
Capital gains tax rate 23.2% (30%-34% including local taxes)
Dividend Distribution tax 20% (20.42%including surtax

Listing Fees For Mothers Or TSE

Listing examination fee: JPY 2 million
nitial listing fee: JPY 1 million;
Public offering / sales fee:
  • Number of offered shares x the offering price of new shares x 0.0009;
  • Number of existing shares offered x offering price x 0.0001;
Annual listing fee: JPY 0.48 to 4.08 million (half for the first 3 years after listing).

Why To Register On Tokyo Stock Exchange?

  • Smooth and Diversified Fundraising
  • Enhance Corporate Value
  • Improve its Internal Management System and Enhance the Employees’ Motivation

Foreign Companies Listed In Japan

Company Industry Company Industry
Tech point Inc Electric Appliances California, United States Mothers
Beat Holdings Limited Information & Communication Cayman Islands Jasdaq
MediciNova,Inc. Pharmaceutical United States 2nd Section
YTL Corporation Berhad Construction Malaysia 1st Section
 
Shanghai Stock Exchange

Requirements For Indian Companies For Listing On Stock Exchange In China

      1. China has previously not allowed foreign companies to get listed on its stock exchanges. But In June 2017, China came with a decision to allow the overseas companies to be listed on a Chinese stock exchange.
      2. UK and China formed an alliance and It’s all part of an unprecedented investment link between the two countries’ stock exchanges that they proceed to form a stock connect Known as the London-Shanghai Stock Connect, a connectivity mechanism between SSE and LSE at the initial stage.
      3. The Shanghai-London Stock Connect allows eligible companies listed in each market to issue depository receipts (DRs) on the other exchange.

Requirements For Indian Companies For Listing On Stock Exchange In China

      4. Eligible brokers in both China and UK may apply for the license to conduct cross-border conversion in accordance with the relevant regulations.
      5. The issuance and listing of Shanghai-London Stock Connect DRs are subject to local regulatory requirements, and issuers are required to fulfil their information disclosure obligations.
      6. Presently no foreign company is listed on this stock exchange. No specific requirements for listing are being communicated so far.

Introduction Of Otc Market
Definition: A decentralized market where participants trade securities directly between two parties without a central exchange or broker electronically
Features:
    1. Dealers act as market-makers by quoting prices at which they will buy and sell a security
    2. Companies which are too small to be registered with NASDAQ OR NYSE register them here and regulations here are much less than stock exchanges.
    3. Companies on the OTC Markets Group platform don’t have to file with the SEC to be listed
    4. All securities traded over-the-counter are, in reality, traded by a web of market makers who input different quotes and trades through a secure computer network that can only be accessed by those who subscribe.
Otc Markets Group: It is the owner and operator of the most substantial U.S. inter-dealer electronic quotation and trading system for OTC securities and is publicly traded on the OTCQX marketplace. It has 3 divisions:
    1. Trading Services: connects broker-dealers together which provides the liquidity and infrastructure for executing trades on the OTC market.
    2. Market Data: provides data and quote services for the more than 10,000 OTC securities.
    3. Corporate Services: helps companies go public and gain greater visibility through listing in one of OTC Markets Group's three OTC tiers.

Why Otc Usa?

    1. Greater Visibility In USA and marketing benefits
    2. Fund Raising will be very easy in USA from Theme based Institutional investors
    3. Greater liquidity through larger trade volume
    4. No disclosure of financial statements on OTC Pink. Most Indian companies are also listed.
    5. Getting customer feedback by showing product of the company in a foreign market
    6. Companies like Nestle are also listed on OTC USA, testimony to its increasing credibility

TYPES

OTCQX

  • Top tier of the three marketplaces for the OTC trading of stocks and stocks that trade on this forum must comply with US security laws.
  • They also must hold sponsorship from a third -party financial adviser.
  • Penny stocks, shell companies, and companies in bankruptcy cannot qualify for a listing on the OTCQX.

OTCQB

  • Middle Tier - Venture Market - Early staged companies are listed here.
  • To be listed, all companies must meet a minimum of a $0.01 bid price test. They also must undergo yearly verification to ensure legitimacy
  • A certain degree of company information must be available. And these companies report to a US regulator like SEC or FDIC

OTC PINK

Lowest ,most speculative tier. No disclosure of financial statements is mandatory in this segment
It is further divided into 3 parts:
Current Information Companies those follow IRS and make filings publicly available through the OTC Disclosure & News Service.
Limited Information Include troubled firms in financial distress, bankruptcy, or those with accounting issues.
No Informationcompanies are those businesses that do not provide any disclosure at all.

OTC QX

Eligibility Criteria:

  • Have U.S. $2 million in Total Assets as of the most recent annual or quarter end;
  • As of the most recent fiscal year end, have at least one of the following:
      1. (i) U.S. $2 million in revenues;
        (ii) U.S. $1 million in net tangible assets;
        (iii) U.S. $500,000 in net income; or (iv) U.S. $5 million in global market capitalization;
  • Be quoted by a market maker on the OTC Link.
  • Have its securities listed on a Qualifying Foreign Stock Exchange for a minimum of the preceding 40 calendar days.
  • Not be in bankruptcy or reorganization proceedings.
OTC QB

Eligibility Criteria:

  • Meet minimum bid price test of $0.01 for each of the last 30 calendar days;
  • Companies may not be subject to bankruptcy or reorganization proceedings the Company’s application;
  • Have at least 50 Beneficial Shareholders, each owning at least 100 shares
  • Have a freely traded Public Float of at least 10% of the total issued and outstanding of that security.
  • International companies must be listed on a Qualified Foreign Exchange (or SEC Reporting)
OTC PINK

There are no qualitative standards beyond disclosure for OTC Pink companies,

1. Current Information:
2. No Information:
Companies with No Information status on OTC Markets are delineated by a “stop” sign and do not provide any current or updated reliable public disclosure.
3. Limited Information:
  • Maintain quarterly and annual reports that are no older than 6 months and that include a balance sheet, income statement and total number of issued and outstanding shares;
  • Financial statements must be prepared in accordance with GAAP; and
  • The company profile page on OTC Markets must be current and accurate.
  • a company must subscribe to the OTC Disclosure & News Service
  • One- Time set up fee: $ 500
  • Annual fee: $ 4200

Indian Companies Listed On Otc Usa

OTCQX

COMPANY NAME INDUSTRY
Mahanagar Telephone Ltd Telephone Comm.
Yatra Online.Inc Transportati on Services

OTC PINK- NO INFORMATION

COMPANY NAME INDUSTRY
Axis Bank Ltd Banking
Farm Lands Of Africa Inc Prepackaged Software
Larsen & Toubro Ltd Engineering & Construction
Tripborn Inc Transportation Services
Rediff.com India Ltd Data Processing & Preparation
Reliance Ltd Conglomerate
Mahindra & Mahindra Ltd Vehicle Manufacturing

OTC PINK- CURRENT INFORMATION

COMPANY NAME INDUSTRY
Groupe Athena Inc Services, Misc.
State Bank Of India Banking

Singapore Stock Exchange

Why Singapore?

    1. Political stability and excellent business environment
    2. Asian gateway of clusters and business opportunities
    3. Access to institutional investors - the biggest international stock exchange in Asia whereby 40% of listed companies are foreign
    4. Quick and efficient fundraising process with certainty of timing
    5. Sector strengths that are well tracked and understood by investors
    6. International disclosure and corporate governance standards

Taxation In Singapore

Income Tax Rate
Tax Rate on corporate profits for upto 300000 SGD Effective Tax Rate at 8.5%
Tax rate on corporate profits for above 300000 SGD 17%
Tax rate on Capital Gain accrued by the company 0%
Tax rate on dividend distribution to shareholders 0%

TYPES

Mainboard

  • In Mainboard Listing, companies are required to meet certain quantitative requirements to get listed
  • Mainboard-listed companies enjoy the prestige of an established market place and access to the widest range of institutional and retail investors.

Catalist

  • In Catalist Listing, companies do not require to have quantitative requirements but needs to appoint a sponsor, who will assess its suitability to list and will advise and guide the company through the listing process. The company must maintain the sponsor at all times after listing.
Overseas Direct Listing Delhi

Continued....

Overseas Direct Listing india

Mainboard Listing Fees

Listing Fees
Initial Fees Annual Fees
Minimum $$100000 Minimum $$35000
Minimum $$200000 Minimum $$150000
Variable Rate per $$million Basic $$100 Market Value Variable Rate per $$million Basic $$30
Processing Fees (Non-Refundable) $$20000 Market Value

Catalist Listing Fees

Listing Fees
Initial Fees Annual Fees
Minimum $$30000 Minimum $$15000
Minimum $$100000 Minimum $$50000
Variable Rate per $$million Basic $$100 Market Value Variable Rate per $$million Basic $$25
Processing Fees $$2000 Market Value

Sponsors & Companies In Catalist Listing

  • Sponsors are authorised and regulated by SGX through strict admission criteria and subject to continuing obligation under the Catalist Rules.
  • Sponsors assess the suitability of companies to list on Catalist and ensure that the listed companies comply with their continuous listing obligations. A Sponsor may be authorised by SGX to act as a Full Sponsor or as a Continuing Sponsor
  • Full Sponsors may engage in:
    1. Pre-listing Activities: i.e. activities related to bringing an applicant to list on Catalist.
      Continuing Activities: i.e. activities relating to sponsorship of issuers who are already listed on Catalist.
  • Continuing Sponsors will only be authorised to undertake Continuing Activities.

Eligibility Criteria For Sponsors

Direct Listing india

London Stock Exchange

Why London?

    1. Provide access to capital for growth
    2. Exchange is the largest stock exchange in Europe and the world's most internationally focused
    3. London is well known for its high standards of regulation
    4. Obtain an objective market value
    5. Increase a company's ability to make acquisitions
    6. Enhance status with customers and suppliers

Taxation In London

Overseas Direct Listing

TYPES

Main Market-High Growth Segment

  • The High Growth Segment (HGS) is a segment of London Stock Exchange’s Main Market. It is a transitional segment designed to attract high growth, mid-sized UK and European companies aspiring to an Official Listing on the Premium Segment over time.

Standard Main Market

  • Standard listings cover issuance of shares, Global Depositary Receipts (GDRs), debt and securitised derivatives that are required to comply with EU minimum requirements

Premium Main Market

  • Only available to equity shares and closed- and openended investment entities
  • Only available to equity shares and closed- and openended investment entities
  • Issuers with a premium listing are required to meet the UK’s Listing Rules, which are more onerous than the EU minimum requirements

AIM

  • AIM offers smaller growing companies from all countries and all sectors all the benefits of being traded on a world-class public market within a regulatory environment designed specifically for them

Requirements For All Types Of Market

Overseas Direct Listing of Indian Companies

Listing Fees

Direct Listing