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Enroute to London: List Your Company Direct into Global Market

enroute to london

Heading Into Uncharted Waters: Indian Companies Going Global

Brace yourselves for a tale of high-stakes adventure, where the brave sailors of the Indian corporate world are casting off their domestic moorings and setting sail for the vast, uncharted waters of global capital markets. This is no ordinary voyage, me hearties – it’s a daring quest for untold riches and boundless opportunities, and the winds of change are blowing in their favor.

The Companies (Amendment) Bill, 2020: A Gale Force Unleashed

For years, Indian corporations were shackled to the shores of domestic exchanges, their only means of venturing abroad being the issue of depository receipts or listing of debt securities. But then, like a mighty gale force, the Companies (Amendment) Bill, 2020 swept in, shattering the chains that bound them and unlocking a whole new realm of possibilities.

With this game-changing legislation, Indian firms can now directly list their shares on foreign stock exchanges, unfurling their sails and charting a course towards uncharted international waters. It’s like a seasoned captain finally being granted the freedom to explore the boundless oceans, with a treasure trove of riches awaiting those bold enough to heed the call.

The Siren’s Call: Why Brave the High Seas?

Ah, but what could possibly tempt these stalwart sailors to abandon the familiar shores of domestic markets and embark on such a perilous voyage? Well, me hearties, the allure of overseas listings is like the siren’s call, a seductive melody that no savvy mariner can resist. Let’s explore the tantalizing treasures that await those who heed this call:

  1. Better Valuations: The Jewel in the Crown

Just like a precious gem shines brighter when set in the right crown, companies often fetch higher valuations on international exchanges compared to their domestic counterparts. It’s the ultimate jewel in the crown for any ambitious firm, a prize worth braving the treacherous seas for.

  1. Wider Investor Base: Casting a Wider Net

Imagine your favorite seafood restaurant opening a new branch in a bustling harbor town – more hungry patrons to cater to! Similarly, overseas listings expose companies to a diverse array of global investors, expanding their shareholder base like a fisherman casting a wider net into fertile waters teeming with untold riches.

  1. Global Brand Recognition: Unfurling the Company Flag

Listing on prestigious foreign exchanges is akin to unfurling your company’s flag on the global stage, a declaration of your arrival on the high seas of international commerce. It’s a stamp of approval that enhances reputation and credibility, making waves in the international business waters and turning heads of seasoned sailors far and wide.

  1. Foreign Currency Inflows: A Favorable Wind

By tapping into foreign markets, companies can generate revenue in different currencies, providing a natural hedge against currency fluctuations. It’s like catching a favorable wind that propels their international expansion efforts forward, filling their sails with the promise of bountiful riches from distant shores.

  1. Better Corporate Governance: Charting a Steady Course

Stringent listing requirements on international exchanges often translate into improved corporate governance standards, instilling greater confidence among investors. It’s like having a seasoned captain at the helm, ensuring a steady course through choppy waters and safeguarding the crew’s (read: shareholders’) interests with unwavering vigilance.

The Pioneers: Navigators Who Braved the Voyage

But fear not, me hearties, for this uncharted voyage has already been braved by a fearless crew of Indian corporate giants. Like seasoned navigators who have mapped the treacherous currents and charted safe passage, these homegrown success stories have listed on prominent foreign exchanges like the New York Stock Exchange (NYSE), setting an example for others to follow.

Infosys, HDFC, ICICI Bank, and Dr. Reddy’s Laboratories are just a few of the stalwart vessels that have unfurled their sails on the global seas, braving the unknown and returning with tales of triumph and untold riches. Their daring voyages have paved the way for others to follow, emboldening a new generation of Indian corporates to set sail and conquer the high seas of international capital markets.

So, what are you waiting for, me brave buccaneers? The winds of change are blowing, the seas are beckoning, and the promise of untold riches awaits those bold enough to chart their course towards global shores. Weigh anchor, hoist the mainsail, and let the adventure begin! The uncharted waters of global capital markets await.

Indian Companies Listed on Global Exchanges

Company Domestic Exchange (INR) Overseas Exchange (USD) Listing
Infosys 800 10.47 NYSE
HDFC 1080.25 47.02 NYSE
ICICI Bank 353.6 9.43 NYSE
Dr. Reddy’s Laboratories 3898 51.39 NYSE
Axis Bank Ltd OTC Pink – No Information (OTC Market)
Larsen & Toubro Ltd OTC Pink – No Information (OTC Market)
State Bank of India OTC Pink – No Information (OTC Market)

 

As the chart illustrates, several prominent Indian companies like Infosys, HDFC, ICICI Bank, and Dr. Reddy’s Laboratories have listed their shares on the prestigious New York Stock Exchange (NYSE). These listings provide them with access to the vast US capital markets, increased visibility, and a diverse global investor base.

In addition to the NYSE, Indian companies have also explored the over-the-counter (OTC) market in the United States. Companies like Mahanagar Telephone Nigam Ltd and Yatra Online Inc. have listed on the prestigious OTCQX tier, which is the highest tier of the OTC market and requires companies to meet stringent disclosure and regulatory requirements.

The OTC Pink market, which is the lower tier of the OTC market, has also attracted several Indian companies. Companies like Axis Bank, Larsen & Toubro, Rediff.com, Reliance Industries, and Mahindra & Mahindra have listed on the OTC Pink – No Information category, which means they are not required to provide any financial or operational information to investors.

On the other hand, companies like Groupe Athena Inc. and State Bank of India have listed on the OTC Pink – Current Information category, which requires them to provide periodic financial and operational updates to investors.

It’s worth noting that while the OTC market offers a more accessible and less regulated path for companies to gain exposure to US investors, it also comes with higher risks and lower liquidity compared to major exchanges like the NYSE.

Overall, the chart highlights the diverse range of Indian companies that have sought overseas listings, ranging from large multinational corporations to smaller ventures, each pursuing their unique growth strategies and capital-raising objectives in the global markets.

The Regulatory Lighthouse: Guiding the Way

While the amendment has set the stage, the actual norms and regulations governing direct overseas listings are still being charted by the Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI). Patience is key as these regulatory bodies act as lighthouses, guiding companies through the treacherous waters ahead.

The Global Ports of Call: A Diverse Tapestry of Destinations

Tokyo Stock Exchange: The Land of the Rising Opportunity

The Tokyo Stock Exchange (TSE) presents a prestigious opportunity for Indian companies seeking overseas listings and access to the Japanese capital markets. With its diverse market segments, stringent listing requirements, and well-established investor base, the TSE offers a platform for companies of varying sizes and growth stages to tap into the global arena.

Market Segments and Listing Requirements:

The TSE features several distinct market segments, each with its own set of eligibility criteria and listing requirements. Let’s dive into the specifics:

  1. Main Market:

   – 1st Section:

     – Number of shareholders: 2,200 or more

     – Tradable shares: 20,000 units or more

     – Market capitalization of tradable shares: JPY 1 billion (USD 10m) or more

     – Ratio of tradable shares to listed shares: 35% or more

     – Market capitalization of listed shares: JPY 25 billion (USD 250m) or more

     – Number of years of business operation: 3 years or more

     – Shareholders’ equity: JPY 1 billion (USD 10m) or more

     – Amount of profits or market capitalization: [Ordinary profit] Total amount of JPY 500 million (USD 5m) or more in the last 2 fiscal years, OR [Market cap.] JPY 50 billion (USD 500m) or more, OR Sales: JPY 10 billion (USD 100m) or more

   – 2nd Section:

     – Number of shareholders: 800 or more

     – Tradable shares: 4,000 units or more

     – Market capitalization of tradable shares: JPY 1 billion (USD 10m) or more

     – Ratio of tradable shares to listed shares: 30% or more

     – Market capitalization of listed shares: JPY 2 billion (USD 20m) or more

     – Number of years of business operation: 1 year or more

     – Shareholders’ equity: JPY 1 billion (USD 10m) or more

     – Amount of profits or market capitalization: [Same criteria as 1st Section]

  1. Mothers:

   – Number of shareholders: 200 or more

   – Tradable shares: 2,000 units or more

   – Market capitalization of tradable shares: JPY 500 million (USD 5m) or more

   – Ratio of tradable shares to listed shares: 25% or more

   – Public offering: 500 trading units or more

   – Market capitalization of listed shares: JPY 1 billion (USD 10m) or more

   – Number of years of business operation: 1 year or more

   – Shareholders’ equity: –

   – Amount of profits or market capitalization: [Ordinary profit] JPY 100 million (USD 1m) or more, OR [Market cap.] JPY 5 billion (USD 50m) or more

  1. JASDAQ Standard:

   – Number of shareholders: 200 or more

   – Market capitalization of tradable shares: JPY 500 million (USD 5m) or more

   – Public offering: 10 percent or more of 1,000 trading units

   – Shareholders’ equity: JPY 200 million (USD 2m) or more

   – Amount of profits or market capitalization: [Ordinary profit] JPY 100 million (USD 1m) or more

Listing Fees:

The TSE’s listing fees vary across market segments and can be a significant investment for companies seeking enhanced visibility and prestige.

For the prestigious First and Second Sections, companies can expect to pay:

– Listing examination fee: JPY 4 million

– Initial listing fee: JPY 15 million (First Section) or JPY 12 million (Second Section)

– Public offering/sales fee: Based on the number of shares offered and offering price

– Annual listing fee: JPY 0.96 to 4.56 million (First Section) or JPY 0.72 to 4.32 million (Second Section)

The Mothers and JASDAQ segments offer more cost-effective options, with initial listing fees starting at JPY 1 million and annual fees ranging from JPY 0.48 to 4.08 million (half for the first 3 years after listing on Mothers).

Taxation Landscape:

Companies listed on the TSE must also navigate Japan’s taxation policies, which can impact their overall profitability and cash flows. Some key tax rates to consider include:

– Corporate income tax rate: 23.2% (up to 30-34% including local taxes)

– Capital gains tax rate: 23.2% (up to 30-34% including local taxes)

– Dividend distribution tax: 20% (20.42% including surtax)

Foreign Companies Listed on the TSE:

While the TSE has traditionally been dominated by Japanese corporations, it has gradually opened its doors to foreign companies seeking access to Japanese investors and capital. Notable examples include:

– Tech Point Inc. (Electric Appliances, California, United States) – Listed on Mothers

– Beat Holdings Limited (Information & Communication, Cayman Islands) – Listed on JASDAQ

– MediciNova, Inc. (Pharmaceutical, United States) – Listed on 2nd Section

– YTL Corporation Berhad (Construction, Malaysia) – Listed on 1st Section

Benefits of Listing on the Tokyo Stock Exchange:

Beyond the substantial capital-raising opportunities, listing on the TSE offers Indian companies several key advantages:

– Smooth and diversified fundraising avenues

– Enhancement of corporate value and global brand recognition

– Improvement of internal management systems and employee motivation

– Access to a well-established and sophisticated investor base

As Indian enterprises chart their course towards global expansion, the Tokyo Stock Exchange presents a compelling destination – a gateway to the Japanese and broader Asian markets, coupled with stringent governance standards and international visibility. With careful navigation and adherence to the listing requirements, the rewards of this prestigious listing could prove invaluable for ambitious Indian corporations.

Listing Requirements

Formal Requirements Eligibility Requirements
– Overseas company – Profitability
– Listed on qualified foreign exchange for 40 days – Revenue and asset thresholds
– Not in bankruptcy – Not in bankruptcy

 

Taxation Landscape

Tax Rate
Corporate Income Tax 23.2% (up to 34% with local taxes)
Capital Gains Tax 23.2% (up to 34% with local taxes)
Dividend Distribution Tax 20% (20.42% with surtax)

 

Listing Fees

Tier Initial Fees Annual Fees
First/Second Section JPY 15-19 million JPY 0.96-4.56 million
Mothers/TSE JPY 1-3 million JPY 0.48-4.08 million*

 

*Half fees for first 3 years after listing

Shanghai Stock Exchange: Uncharted Waters, Vast Potential

The Shanghai Stock Exchange is a relatively new frontier for foreign companies, having only recently opened its doors through the Shanghai-London Stock Connect program. While the specifics are still being mapped, this could be a golden opportunity for Indian firms to set sail towards the vast Chinese market, tapping into its immense potential.

Singapore Exchange: A Welcoming Harbor

The Singapore Exchange offers a welcoming harbor for foreign listings, boasting a streamlined fundraising process and a well-established investor base. The Mainboard and Catalist segments cater to companies of varying sizes and maturity levels, ensuring a comfortable berth for all seafaring enterprises.

London Stock Exchange: The Grand Dame of Bourses

And then there’s the grand dame of stock exchanges – the London Stock Exchange. With its reputation for high regulatory standards and global reach, a listing here could be the ultimate badge of honor for an Indian company seeking international validation. It’s like docking at the most prestigious port, a testament to a company’s seaworthiness on the global stage.

The Over-the-Counter (OTC) Route: A Shorter Coastal Voyage

For those seeking a more cost-effective and less regulated coastal voyage, the OTC market in the United States presents an intriguing alternative. Indian companies like Mahanagar Telephone, Yatra Online, Axis Bank, and even the esteemed Reliance have already ventured into this realm.

The OTC market offers three tiers: the prestigious OTCQX, the mid-tier OTCQB, and the more speculative OTC Pink. Each tier comes with its own set of disclosure requirements and eligibility criteria, allowing companies to choose the path that best aligns with their goals and resources – a coastal cruise or a longer voyage, the choice is theirs.

For ambitious Indian entrepreneurs seeking to go global, the traditional routes of major stock exchanges can seem like a daunting and distant dream. But what if there was an alternative path – one that offers a more accessible entry point to the vast American market? Enter the Over-the-Counter (OTC) market, a unique and often overlooked realm that presents a world of opportunities for Indian companies looking to make their mark on the international stage.

Picture this: you’re a homegrown Indian startup, brimming with innovative ideas and a burning desire to take your business to new heights. You’ve conquered the domestic market, but your sights are set on the glittering lights of the American dream. The NYSE and NASDAQ beckon, but the stringent listing requirements and intense scrutiny seem like insurmountable hurdles. That’s when the OTC market becomes your knight in shining armor, offering a more unconventional yet highly compelling route to global visibility.

Unlike the traditional exchanges, the OTC market operates in a decentralized fashion, with participants trading securities directly between two parties, sans the formalities of a central exchange or broker. It’s a realm where the rules are a little more relaxed, and the barriers to entry are lower – a perfect playground for smaller companies that might not yet meet the lofty criteria of the major leagues.

But don’t be fooled by its laid-back demeanor; the OTC market is far from a mere sideshow. It’s a thriving ecosystem where companies like Nestlé have chosen to list, lending credibility to this often-overlooked arena. And for Indian firms, the benefits are manifold: greater visibility in the vast American market, easier access to funding from theme-based institutional investors, and the invaluable opportunity to gauge customer feedback by showcasing their products on foreign soil.

At the heart of this unconventional world lies the OTC Markets Group, a veritable gatekeeper that operates the most substantial inter-dealer electronic quotation and trading system for OTC securities. With its three distinct tiers – OTCQX, OTCQB, and OTC Pink – the group offers Indian companies a smorgasbord of options, each with its own set of disclosure requirements and eligibility criteria.

The OTCQX, the crème de la crème of the OTC realm, demands adherence to stringent U.S. securities laws and the sponsorship of a third-party financial adviser. It’s a stage reserved for the most seasoned players, where penny stocks, shell companies, and bankruptcy-bound entities need not apply.

For those still finding their footing, the OTCQB – the “Venture Market” – beckons with its more forgiving embrace. Here, early-stage companies can list, provided they meet the minimum bid price test and undergo annual verification to ensure legitimacy.

And then there’s the OTC Pink, the most speculative tier of them all, where financial disclosure is optional, and the rules are more relaxed. It’s a realm where companies can dip their toes into the OTC waters without the burden of excessive regulatory scrutiny.

Already, several Indian heavyweights have ventured into this unconventional territory, with names like Mahanagar Telephone, Yatra Online, Axis Bank, Larsen & Toubro, and even the mighty Reliance gracing the ranks of the OTC Pink – a testament to the growing allure of this alternative path.

So, for those Indian entrepreneurs with an insatiable thirst for global recognition and a willingness to break free from convention, the OTC market presents an intriguing opportunity – a chance to plant their flag on American soil without the constraints of traditional exchanges. It’s a journey that promises visibility, liquidity, and the potential for growth, all while allowing companies to forge their own path and write their own rules.

Embrace the unconventional, fellow trailblazers, for in the realm of the OTC market, the boundaries are limitless, and the opportunities are ripe for the taking.

Navigating the Tides: Taxation and Listing Requirements

As Indian companies embark on this exciting odyssey, they’ll need to navigate the intricate tides of regulations, taxation policies, and listing requirements across different markets. From the corporate tax rates and capital gains taxes in Japan to the disclosure norms of the OTC markets, each destination presents its own set of challenges – treacherous currents that must be skillfully maneuvered.

Anchors Aweigh! The Journey Ahead

So, corporate seafarers, unfurl your sails and chart your course! The world is your vast ocean, and the stage is set for a new era of Indian companies going truly global. The adventure has just begun, and the treasures that await those who brave these uncharted waters are boundless.

With steadfast determination, a keen eye for opportunity, and an unwavering commitment to excellence, Indian enterprises can rise to the occasion, leaving an indelible mark on the international business landscape. Anchors weigh, and may the winds be ever in your favor!

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