Company Registration

Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024

calendar19 Mar, 2024
timeReading Time: 5 Minutes
Listing of Equity Shares in Permissible Jurisdictions

A substantial regulatory structure was implemented to control the listing of equity shares by firms in acceptable jurisdictions, and it is known as the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024. The objective of these regulations is to expedite and oversee the listing procedure for equity shares of firms in jurisdictions that have been approved by pertinent regulatory bodies. These rules frequently deal with matters of openness, market integrity, and investor protection. These guidelines give enterprises looking to access capital markets outside of their home jurisdictions clarity and confidence by outlining the prerequisites and processes for listing in authorized jurisdictions. Furthermore, they help to boost investor confidence by making sure businesses adhere to rules and laws in the countries where their shares are listed, which promotes credibility and trust in the global market.

Process of listing of equity shares as per Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024

Here is the process of listing Equity Shares in Permissible Jurisdictions as per Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024. However, the process may vary according to the requirements of the different jurisdictions. 

Adherence to Eligibility Criteria

Requirements outlined in the legislative framework should be determined by businesses that wish to list the equity shares in a particular jurisdiction. It should be looked at if they are above the required capital requirement, and are adhering to the regulatory compliances and corporate governance methods. For example, a private limited company cannot list its shares as per the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.

Regulatory Authorities engagement

If the company is planning to list its equity shares, then it has to comply with Listing of Equity Shares rules that state wherever the listing is to be done and the nation to which the company belongs, the engagement with the regulatory bodies should be good to comply with provisions like disclosure of certain terms, governance, etc.

Conducting Due-diligence

Companies Rules, 2024 states that before listing the equity shares as per new company law rules the company should do due diligence on the basic requirements needed to get the shares listed in other jurisdictions. It helps the company prepare better for any legal paperwork, statutory compliance, or any other necessary compliance before getting their equity shares listed.

Advisors Appointment

Companies Rules, 2024 hasn’t made it necessary to appoint the advisors, but their appointment holds utmost importance since while listing the shares, the company will need to comply with the financial and legal framework, and for that, they will need expert guidance. In this case, the appointment of individuals like financial advisors (CA, CS, CFA) and Legal Advisors (Advocate) is required so that the company is in compliance with all the regulations and it will have to face no backdrops during the listing of shares as per the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024.

Application Submission

After reviewing all the necessary documents and compliance, the company has to apply as stated in the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, in the appropriate jurisdiction in compliance with their regulatory laws. The application generally includes documents like the company’s financial statements, company information, prospectus, and other important documents that are deemed to be provided as per the framework set in the Listing of Equity shares rules.

Grant of Approval

After the application procedure is done in compliance with the Companies Rules, 2024, the authorities will conduct a review process. The authorities, along with the corporation, review the application and see if all the mandatory requirements comply with the Listing of Equity shares rules or not. If they comply, then they can be approved, and if there are some changes to be made or any addition in documents is required, then the applicant would be asked to submit those necessary documents.

Stock Exchange Listing   

After the grant of approval, the equity shares of the company are listed in the stock exchange of the jurisdiction in which it has applied. The listed company shares will be open for trading, and transparency must be maintained as per the Listing of Equity shares rules.

Post Listing Compliance

When the approval is granted, and the trading becomes complete, it doesn’t mean that there are no compliance requirements for the company to follow. New company law rules state that even after the listing and trading, the company has to follow compliances such as material information disclosure, reporting of finances, and adherence to the governance norms already mentioned.

Importance of Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024

The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 holds much importance while following the listing of equity shares process. These are –

  • The regulations and rules made make sure that the newly listed and to-be-listed companies are strictly following the standards set by the Companies Rules, 2024. This adherence streamlines the process of listing and also builds investor’s trust in the listed company.
  • The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, have scraped the confusion by determining the jurisdiction in which the listing of the equity shares can be done without failing to comply with the regulations. Jurisdictional acceptance has given companies the privilege of looking only into the areas where they can make the application. 
  • The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, help the interests of the investors with all the transparency in the business activities maintained. The application process, as per these rules, is so strict and adhering that there is almost no chance of any fraudulent activity; even after the listing of the equity shares, the company has to adhere to the rules and provide financial details to the regulatory authority at regular intervals to scrutinize. 
  • The rules also emphasized the foreign investors and the cash flow in cross-border areas. It helps in maintaining the jurisdiction area where a company can list its shares and trading can be done. This foreign investment provides diversification to the organization and helps it grow further.
  • The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 helps in more listing of companies as public companies in the country so that they can also list their shares in the stock exchange and get the necessary investment for their business growth and innovation. Public company registration is beneficial for the general public as well since it generates employment in the country thereby leading to economic growth.

The Listing of Equity shares rules are laid down to protect the interests of investors and make it necessary to follow the regulatory compliances to get their equity shares listed in the stock exchange. It governs the entities and lays down appropriate measures that need to be followed by the companies before and after the shares are listed.

Conclusion

Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 has brought a massive change in the way a company is listed in the market of a particular jurisdiction. It has aligned the system, and now investors are satisfied before investing in the company or even buying their shares from the stock market. It has provided the necessary security in the minds of people that the company listed is not fraud and their money isn’t at risk. The benefits are not only for the general public or investors but also for the company since its listing would increase the cash flow, and with investment coming from all around the area, it will have good money to invest in and expand the business further.

Corpbiz can help these public companies follow all the compliances that are made mandatory in the new company law rules to get the company listed. We have a good customer base that avails of the service and is satisfied with the work performed. The experienced individuals at our organization will help you go through the process without any hindrance from other sources. Our professionals will take care of the process, and all the documentation will be done beforehand.

Frequently Asked Questions

  1. Which companies can be listed on the stock exchange as per new company law rules?

    The companies that can be listed on the stock exchange as per new company law rules are –
    ·  Public Companies (those are unlisted)
    ·  Listed Public Companies (working as per the regulations set by the SEBI and IFSCA)

  2. What is the approval process for listing after the application is made?

    After the application procedure is done in compliance with the Companies Rules, 2024, the authorities will conduct a review process. The authorities, along with the corporation, review the application and see if all the mandatory requirements comply with the Listing of Equity shares rules or not. If they comply, then they can be approved, and if there are some changes to be made or any addition in documents is required, then the applicant would be asked to submit those necessary documents.

  3. What type of securities are listed on the stock exchange as per Companies Rules, 2024?

    Only equity shares are listed on the stock exchange as per Companies Rules, 2024.

  4. Which International Exchanges are permissible as per the rules?

    According to the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, the international exchanges that are permissible for listing of shares are –
    · NSE International Exchange
    · India International Exchange

  5. Are there any public companies not eligible for listing as per the rules for listing equity shares?

    Yes, there are a few public companies that are not eligible for listing as per Listing of Equity shares rules –
    · Nidhi Companies or Section 8 Companies, registered under the Companies Act 2013.
    · Companies that are limited by guarantee that also have a share capital
    · The companies that have a negative net worth
    · The companies that have outstanding deposits, which are accepted by the general public according to the Companies Act 2013 (Chapter V and rules mentioned thereunder)
    · The additional requirements, which are outlined in Rule 3 of the FEMA Direct Listing Scheme and Rule 5 of the Companies Overseas Listing Rules, provide qualifying requirements and limitations for Indian public corporations issuing equity shares.

  6. What are the regulations that are to be followed to get the company listed?

    The regulations that are to be followed to get the company listed are as follows –
    · FEMA direct listing scheme and other applicable provisions from FEMA non-debt rules, 2019.     
    · The provisions that are applicable are as per the Companies Act, 2013, and also from companies overseas listing rules.
    · The Securities Contracts (Regulation) Act of 1956.
    · Operational guidelines were issued by SEBI in 1999, and the guidelines were to be issued for cross-border listing of listed companies.
    · The Depositories Act, 1996
    · FEMA, 1999
    · Prevention of Money Laundering Act, 2002
    · IFSCA Act of 2019 that also includes the IFSCA (Issuance and Listing of Securities) Regulations of 2021

  7. Is it mandatory for an unlisted company to list firstly on the domestic exchange and then on the international exchange?

    No, an unlisted Indian company doesn't need to list firstly on the domestic exchange and then on the permissible international exchanges. Even if the company is not listed in the National/ domestic exchange, the company can get listed and trade in the permissible international exchanges since there are no restrictions on the companies to list in both exchanges.

  8. Are private companies allowed to be listed on the permissible international exchange?

    No, private companies are not allowed to be listed on the permissible international exchange.

  9. Which act helped the government to draft the new company law rules?

    The government drafted the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, by exercising its powers mentioned under the Companies Act in subsection 3 of Section 23, which is read with Section 469 of the said act.

  10. Why is due diligence needed before listing of shares?

    Companies Rules, 2024 states that before listing the equity shares as per new company law rules the company should do due diligence on the basic requirements needed to get the shares listed in other jurisdictions. It helps the company prepare better for any legal paperwork, statutory compliance, or any other necessary compliance before getting their equity shares

Read Our Article: Dematerialisation Of Shares For Private Companies In India

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