Recently, I came across an issue while reviewing an offer document for a proposed listing in GIFT City IFSC that, in my experience, is becoming increasingly common, and increasingly problematic. The draft prospectus proceeded on the assumption that because the issuer was an Indian incorporated company, the Securities Contracts (Regulation) Act, 1956 (SCRA) and the Securities Contracts (Regulation) Rules, 1957 (SCRR) would automatically apply in full to the IFSC listing. As a result, several Indian onshore listing concepts were imported into the document almost mechanically.
At first glance, this assumption appears logical. After all, the issuer is Indian. But from a legal standpoint, it is fundamentally flawed. More importantly, it leads to avoidable drafting errors, internal inconsistencies, and self-imposed compliance obligations that the law itself does not require.
This article sets out my considered view on why Indian incorporation alone does not trigger full SCRA applicability, how SCRA concepts actually enter the IFSC framework, and why statutes and regulations in this space must be read holistically rather than selectively.
Where the Confusion Starts: Indian Company ≠ Indian Securities Law
The root of the confusion lies in conflating company law with securities market regulation.
An Indian company is undoubtedly governed by the Companies Act, 2013. Section 23 of that Act permits an Indian public company to list its securities not only on recognised Indian stock exchanges, but also on foreign stock exchanges, including those located in an IFSC. However, Section 23 is merely an enabling provision. It authorises issuance and listing; it does not determine which securities market law governs that listing.
Securities market regulation does not follow the issuer. It follows the exchange and the regulator supervising that exchange. The SCRA regulates trading and listing on recognised stock exchanges under Indian law, overseen by SEBI. IFSC stock exchanges, although geographically located in India, are statutorily distinct. They are regulated by the International Financial Services Centres Authority (IFSCA) under a separate Parliamentary enactment. They are not recognised stock exchanges under the SCRA.
This distinction is not semantic. It is jurisdictional.
How SCRA and SCRR Actually Enter the IFSC Framework
That said, it would be equally incorrect to say that SCRA concepts are wholly irrelevant to IFSC listings. They do enter the IFSC framework, but only in a controlled and limited manner, and only where the IFSC regulations expressly permit them to do so.
The most prominent example is Regulation 20 of the IFSCA (Listing) Regulations, 2024. This provision specifically states that where the issuer is a company incorporated in India, it shall comply with SCRR norms relating to minimum offer to public, allotment to public, and minimum public shareholding. This is a conscious and targeted import of specific SCRR concepts.
What is important, and often missed-is what Regulation 20 does not do. It does not import the entire SCRR framework. It does not import Indian IPO reservation norms, minimum subscription rules, SEBI-style allocation mechanics, or enforcement architecture. The import is limited to what is expressly stated, and nothing more.
Beyond this express import, SCRA and SCRR concepts enter the IFSC regime only at the definition level. The interpretation clause of the IFSC regulations allows undefined terms to borrow meanings from statutes such as the Companies Act or SCRA. This ensures conceptual clarity, but it does not import substantive compliance obligations. Definitions explain words; they do not create duties.
This distinction between definition alignment and regulatory application is critical, yet frequently misunderstood.
Why Selective Reading of Regulation 20 Is Legally Unsound
A further error I often see is the tendency to read Regulation 20 in isolation, treat it as dominant, and ignore the rest of the IFSC regulatory framework. This approach does not survive basic principles of statutory interpretation.
The IFSCA (Listing) Regulations, 2024 must be read as a complete and integrated code. Each provision has a role. Regulation 20 imports limited public shareholding concepts. Regulation 21 separately governs minimum subscription, allowing issuers to define issue success thresholds in their offer documents. Regulation 25 explicitly permits discretionary allotment across investor categories.
These provisions are not accidental. They reflect a deliberate departure from the rigid structure of Indian onshore IPOs. If the SCRA or SCRR were intended to apply wholesale, Regulations 21 and 25 would either be redundant or contradictory. The fact that they coexist confirms legislative intent: SCRA is not the governing regime for IFSC listings.
As a matter of settled law, no provision can be interpreted in a manner that renders other provisions otiose. Regulation 20 cannot be stretched to override Regulations 21 and 25.
A Practical Example: How Drafting Creates Risk Where Law Does Not
The most serious risk in this area does not arise from the statute-it arises from drafting.
In the matter I reviewed, the draft prospectus stated that the offer was being made “pursuant to Rule 19(2)(b) of the SCRR” and that at least 10% of each class of equity shares would be offered and allotted to the public. Elsewhere, the same document relied on discretionary allotment provisions under IFSC regulations.
This created an immediate conflict. A hard disclosure-level commitment was being made on one page, while discretionary flexibility was preserved on another. If the final allotment were to result in less than 10% public holding, the issuer might still comply with IFSC regulations, but it would have breached its own offer disclosures.
This is not a theoretical concern. It is exactly how disclosure-based non-compliance risk is created, entirely independent of regulatory breach.
The Correct Legal Position, Properly Stated
In my considered view, the legal position is clear. The SCRA does not apply automatically or in full to IFSC listings merely because the issuer is an Indian company. SCRA and SCRR concepts apply only to the extent that they are expressly imported by the IFSC regulatory framework, and only in a manner consistent with that framework.
The governing law for IFSC listings is the IFSCA Act and the regulations made under it. Indian securities law plays a limited, contextual role where the IFSC regulations deliberately allow it to do so.
Anything beyond that is not compliance, it is overreach by drafting.
Conclusion
IFSC listings are not Indian IPOs conducted in a different geography. They are international listings under a distinct statutory regime, designed to be flexible and globally competitive. Treating SCRA as automatically applicable to Indian issuers in IFSC misunderstands both the statute and the intent behind the IFSC framework.
The key lesson for issuers, advisors, and drafters is simple but critical: in IFSC listings, law follows the exchange and the regulator, not the nationality of the issuer. Precision in legal anchoring is not just good drafting—it is essential risk management.
