Listing of CP & CD on exchanges in IFSC, GIFT City

Regulations 80 and 81 of the IFSCA (Listing) Regulations, 2024, (“Listing Regulations”) establish the framework for listing securities and other financial products on recognized stock exchanges in the IFSC. Specifically, these regulations enable the listing of Commercial Papers and Certificates of Deposit, outlining the conditions and procedures set by IFSCA. The listing of these financial instruments will adhere to the requirements detailed in the IFSCA Circular issued on October 17, 2024.

COMMERCIAL PAPERS (CP)

Eligibility Issuers

1. Operating Revenue – At least USD 20 Million in the last financial year or averaged over the last 3 financial years.
2. Pre-Tax Profit – At least USD 1 Million in the last financial year or averaged over the last 3 financial years.
3. Post Issue Market Capitalization – At least USD 25 Million.

Conditions

1. The issuer must ensure that the CP listed on a recognized stock exchange in the IFSC is in demat form and held with a recognized depository in the IFSC or an international central securities depository.
2. The CP’s maturity must be between 7 days and 1 year.
3. The CP must be denominated in a foreign currency as allowed by regulation 8 of the Listing Regulations.
4. Additional conditions include: CPs must be issued at a discount to face value, no call/put options are allowed, and they cannot be underwritten or co-accepted.

Eligible Investors 

The issuer is allowed to issue a CP to either a resident of India or a resident of a foreign country.

Listing Application 

1. An issuer seeking to list its CP on a recognized stock exchange must submit a listing application along with an offer document or information memorandum, following the exchange’s requirements.
2. A regulatory fee of USD 1,000 must accompany the application, which the stock exchange will remit to the Authority.
3. The offer document or information memorandum must include all relevant, accurate, and sufficient disclosures to help investors make informed decisions.

Buyback 

The issuer must ensure that any buyback of a CP complies with the following conditions:

1. The buyback, whether partial or full, must occur at the current market price.
2. The offer should be made to all investors in the issue, with identical terms for everyone.
3. The buyback cannot take place before 30 days from the date of issuance.
4. Once bought back, the CP must be extinguished.

CERTIFICATE OF DEPOSIT (CD)

Eligibility of Issuers

1. Indian and foreign banks must obtain a license or permission from the Authority to establish a banking unit in an IFSC.
2. Minimum capital requirement for the parent bank is USD 20 million, and for the applicant bank is USD 50 million, or as specified by the Authority.
3. The parent bank must secure a No Objection Certificate from its home regulator for setting up the unit.
4. The parent bank must also provide an undertaking to supply liquidity to its IFSC Banking Unit whenever required.

Condition 

The issuer must ensure that any CD listed on a recognized stock exchange in the IFSC is in demat form and held with a recognized depository in the IFSC or an international central securities depository.

Listing Application 

1. An issuer wishing to list its CD on a recognized stock exchange must submit a listing application along with an offer document or information memorandum, as specified by the exchange.
2. The application should include a regulatory fee of USD 1,000, which the stock exchange will remit to the Authority.
3. The offer document or information memorandum must contain all necessary disclosures that are accurate and sufficient to enable investors to make informed decisions.

Benefits

The benefits of listing CPs and CDs on recognized stock exchanges in the IFSC include increased transparency, better price discovery, and enhanced liquidity for these short-term financial instruments. This formalized listing supports market efficiency by providing issuers with access to a broader investor base, potentially lowering the cost of capital. It also strengthens the financial infrastructure of the IFSC, making it an attractive hub for global investors and financial institutions.

Disclaimer: The information published in the above newsletter is collected from various sources in electronic medium and analyzed by the firm. The reader is advised to consult the attorney qualified in their jurisdiction, before acting on any information contained in this newsletter. India Juris excepts no liability what so ever in this regard.