practice area: criminal law
date: October 4, 2023


In recent years, Indian companies have shown a growing interest in exploring overseas listing as a means to access international capital markets and expand their global footprint. Overseas listing involves the process of listing shares of an Indian company on a foreign stock exchange. This strategy offers numerous benefits, including access to a larger capital pool, international visibility, diversification of shareholder base, enhanced corporate governance standards, and mitigation of currency and market risks. This article delves deeper into the advantages of overseas listing for Indian companies, the legal reforms that made it possible, and the potential impact on the Indian economy and investors.

Benefits of Overseas Listing for Indian Companies

Access to Larger Capital Pool – One of the most significant advantages of overseas listing is access to a broader and more diverse pool of investors. The increased investor base leads to greater liquidity for the company’s shares and can result in a higher valuation, bolstering the company’s financial position.

International Visibility and Brand Recognition – Overseas listing on reputable stock exchanges elevates the company’s profile and credibility on the global stage. This international visibility can open doors to new business opportunities and collaborations.

Diversification of Shareholder Base – Listing on foreign exchanges enables Indian companies to diversify their shareholder base geographically. By reducing their reliance on domestic investors, these companies become less vulnerable to fluctuations in the domestic market. This diversification provides greater stability during economic downturns and uncertainties, making the company more resilient.

Enhanced Corporate Governance Standards – Many foreign stock exchanges impose stringent regulatory requirements on listed companies, ensuring better corporate governance practices. Compliance with these regulations promotes transparency, accountability, and fairness within the company’s operations. As a result, investor confidence in the listed Indian companies increases, attracting more investment.

Currency and Market Risk Mitigation – Overseas listing acts as a hedge against currency and market risks that are often prevalent in the Indian market. Companies can raise funds in foreign currencies, reducing their exposure to exchange rate fluctuations. This helps in managing risks associated with currency devaluation and other market volatilities.

Legal Reforms Leading to Direct Cross-Border Listing

While overseas listing held great promise for Indian companies, it came with its fair share of challenges. Indirect listing through American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs) involved complex regulatory restrictions, high costs levied by underwriters and financial institutions, and a lack of transparency, leading to strict scrutiny from regulators. Allegations of malpractice and market manipulation further discouraged companies from considering this route. As a result, only a handful of companies, like Wipro and Infosys, opted for indirect listing, while many others avoided it altogether.

To address these challenges and foster a more efficient and transparent process for raising capital through cross-border listings, SEBI constituted a high-level expert committee in 2018. The committee’s primary objective was to formulate a comprehensive report and recommend policy changes that would facilitate direct listing of equity shares of companies incorporated in India.

The high-level expert committee’s report firmly advocated for the introduction of cross-border direct listing as a more transparent and efficient mechanism for transactions. Based on these recommendations, the Indian government enacted the Companies (Amendment) Act 2020 (“Amendment Act”) to amend section 23 of the Companies Act 2013. This amendment effectively allowed Indian companies to convert their existing ownership into stock and offer equity directly to the general public via stock exchanges, streamlining the process of inviting foreign investment.
Furthermore, it introduced several advantages for Indian corporations seeking to raise capital from international investors. By enabling direct listing, companies could now bypass the complexities and costs associated with indirect listing methods. This created a more transparent mechanism for transactions and easier tracking, reducing the likelihood of malpractices and market manipulations. The streamlined process also allowed corporations to attract foreign investments more efficiently, boosting their growth potential and contributing to India’s economic development.

Potential Impact on the Indian Economy and Investors

The relaxation in the regulatory scheme for listing unlisted Indian companies in foreign markets offers a viable avenue for these companies to raise capital. By having the option to list abroad, companies can make an informed decision about where to list their securities based on their specific circumstances.

For certain types of companies, listing on foreign markets may present an attractive opportunity. These companies might not find enough investor interest or depth in the domestic markets, particularly if they operate in niche sectors like technology-driven fields. Foreign markets may be more receptive to the ideas and innovative products of such niche companies, providing them with the capital and premium they deserve but might not get in the domestic markets.

Moreover, by attracting foreign investments, Indian companies can fuel their expansion and growth plans. Additionally, the exposure to international investors can improve corporate governance practices and operational efficiencies within Indian companies, making them more competitive on the global stage.

For investors, overseas listing provides access to investment opportunities in Indian companies with growth potential and innovative business models. Foreign investors gain exposure to the Indian market without being confined to the country’s domestic stock exchanges. This diversification of investment portfolios can mitigate risks and potentially yield attractive returns.


Overseas listing has emerged as an enticing avenue for Indian companies to expand their global reach and access international capital markets. The Amendment Act marked a significant milestone in the Indian regulatory framework, facilitating cross-border capital raising for corporations through direct listing. By addressing challenges associated with indirect listing methods and promoting transparency, the amendment encourages international investors to consider Indian companies as attractive investment opportunities. This, in turn, has the potential to drive economic growth, foster innovation, and strengthen India’s position in the global marketplace. As Indian companies continue to explore overseas listing opportunities, it is imperative to strike a balance between growth aspirations and maintaining compliance with global regulatory standards to harness the full potential of this strategy.

Written by Nidhi Arora (Partner) and Kriti Mehrotra (Associate)


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