Eligibility Criteria for Listing Securities in GIFT City (IFSC): A Practitioner’s Perspective

In live IFSC transactions, eligibility is never a standalone compliance check. It is the first structural decision that quietly determines whether a listing will move smoothly or grind through months of regulator correspondence. I have seen transactions that were technically permissible under the regulations still struggle because eligibility was approached mechanically, without appreciating how IFSCA actually evaluates issuers and instruments. GIFT City listings are not designed to be a mirror image of Indian domestic capital markets; they are positioned as offshore, institution-facing transactions governed by principles rather than rigid thresholds. That design choice places enormous weight on how eligibility is interpreted, positioned, and explained in the offer document.

This expanded note looks at eligibility for listing securities in GIFT City from the perspective of someone who drafts these documents and handles IFSCA comments, not from the perspective of a statute book. The discussion focuses on how eligibility is read by the regulator, where issuers and bankers usually misjudge it, and how drafting choices can either smooth or derail the listing process under the framework administered by the International Financial Services Centres Authority in GIFT City IFSC.

What does “eligibility” mean in the IFSC framework?

Eligibility for listing securities in GIFT City means that the issuer, the proposed securities, and the transaction structure comply with IFSCA regulations and applicable exchange-control laws, and are suitable for an international, institution-led market in terms of governance, disclosures, and investor protection.

This definition is deliberately broader than what most Indian issuers are used to. In the IFSC framework, eligibility is not a single gate that opens or closes. It is a composite assessment built around the regulator’s comfort that the issuer belongs in an offshore capital-markets ecosystem. That assessment cuts across legal permissibility, financial credibility, governance maturity, and the overall narrative presented to investors.

A common mistake is to treat eligibility as something that can be “cleared” before drafting begins. In reality, eligibility is tested continuously during the review of the offer document. Each disclosure section either reinforces or undermines the regulator’s comfort. By the time the comment letter arrives, eligibility has already been judged—just not announced in those words.

The policy logic behind IFSC eligibility norms

To understand eligibility, one must first understand what IFSC is not. It is not an alternate SEBI jurisdiction, and it is not a relaxed domestic market with lighter compliance. IFSC is designed to compete with international financial centres, not with Indian stock exchanges. That policy intent shapes eligibility in three important ways.

First, the framework assumes sophisticated issuers and investors. The regulations therefore avoid granular entry barriers and instead rely on disclosure quality and market discipline. Second, IFSC is intended to facilitate cross-border capital flows. As a result, eligibility is closely intertwined with foreign exchange, repatriation, and enforcement considerations. Third, the regulator expects intermediaries and issuers to exercise judgment. If that judgment is absent, IFSCA steps in through comments rather than upfront prohibitions.

Eligibility, therefore, operates as a principles-based filter rather than a checklist.

Issuer eligibility: who can access the IFSC listing platform

Indian incorporated companies

Indian companies are fully eligible to list securities in GIFT City, whether they are already listed domestically or not. This openness often creates a false sense of simplicity. While there is no prohibition on unlisted Indian companies accessing IFSC, the regulator expects such issuers to explain why an offshore listing is appropriate for them at their current stage.

From a drafting perspective, the eligibility question for Indian issuers revolves around alignment. The regulator looks for alignment between Indian corporate law compliance, FEMA permissibility, and international investor expectations. An issuer that is compliant under Indian law but structured in a way that restricts transferability, voting rights, or economic participation will face scrutiny, even if no regulation is technically violated.

Indian issuers must also confront the reality that IFSC investors will not read the transaction through a “domestic India” lens. Disclosures that are considered standard in Indian IPOs often appear inadequate or opaque to offshore investors. When those gaps surface, eligibility becomes a live issue during review.

Foreign incorporated companies

Foreign issuers are central to the IFSC vision, but they are also subjected to deeper qualitative assessment. Eligibility for foreign companies is rarely questioned in terms of incorporation status. Instead, it is tested through enforceability and comparability.

IFSCA expects foreign issuers to demonstrate that investors in IFSC will enjoy meaningful, enforceable rights. This includes clarity on governing law, dispute resolution mechanisms, recognition of Indian judgments or arbitral awards, and practical ability to remit funds. Jurisdictions with restrictive exchange controls or weak shareholder enforcement frameworks are not automatically excluded, but the burden of explanation increases significantly.

Financial reporting is another critical eligibility dimension. While IFRS is not always mandatory, functional equivalence is expected. Where local accounting standards differ materially, reconciliation disclosures are not treated as a formality. They are central to the regulator’s comfort that investors can reasonably assess the issuer’s financial position.

IFSC entities and special purpose vehicles

IFSC-incorporated entities, particularly SPVs created for debt issuance, are common listing vehicles. They are generally eligible, but their acceptance depends heavily on economic substance and transaction rationale.

IFSCA looks beyond incorporation to examine why the entity exists, how cash flows move through it, and whether risks are transparently allocated. An SPV that merely passes proceeds upstream without adequate disclosure or credit clarity may technically qualify as an issuer, but it will struggle to satisfy eligibility expectations during document review.

Financial track record and operating history

One of the defining features of IFSC eligibility is the absence of rigid profitability or net-worth thresholds. This flexibility is often misunderstood. The absence of bright-line tests does not mean the absence of expectations.

IFSCA evaluates financial track record contextually. A mature operating company with stable revenues is expected to present a different level of financial robustness than a project-based issuer or a newly incorporated SPV. What matters is whether the financial story presented in the offer document is internally consistent and credible.

For early-stage or loss-making issuers, eligibility is closely tied to disclosure quality. The regulator expects a clear explanation of business sustainability, funding runway, and risk factors. Attempts to minimise losses through accounting presentation or selective emphasis almost always invite scrutiny.

Where historical financial information is limited or unavailable, the offer document must explain why that is the case and how investors should assess risk in its absence. This explanation is not a footnote exercise; it often becomes central to the regulator’s eligibility comfort.

Governance as an eligibility determinant

Governance is rarely described explicitly as an eligibility criterion, yet in practice it is one of the most decisive factors in IFSC listings.

IFSCA does not mechanically apply Indian corporate governance prescriptions. Instead, it evaluates whether the issuer’s governance framework provides adequate checks, balances, and transparency for an international investor base. This evaluation is entirely disclosure-driven.

Board composition is examined not just for independence labels, but for functional independence. Concentrated control, promoter dominance, or family-run structures are not disqualifying. However, they must be explained honestly, along with mitigating safeguards.

Committee structures, internal controls, and risk management processes are assessed in substance. An issuer that uses different terminology or follows a home-jurisdiction model is not penalised, provided the model is clearly described and demonstrably effective.

Governance eligibility issues usually arise when issuers attempt to “dress up” domestic compliance as international governance without addressing substantive gaps.

Litigation and regulatory history

There is no formal clean-track-record requirement for IFSC listings. Nevertheless, litigation and regulatory history often become de facto eligibility issues.

IFSCA focuses on materiality and transparency. Ongoing disputes, enforcement actions, or regulatory investigations do not automatically render an issuer ineligible. What undermines eligibility is selective disclosure or aggressive minimisation of risk.

From a drafting standpoint, the challenge is judgment. Over-disclosure can obscure material issues, while under-disclosure damages credibility. The regulator’s questions in this area often test whether management understands its own risk landscape.

Repeated or systemic regulatory violations, particularly relating to securities markets, foreign exchange, or financial misconduct, invite heightened scrutiny. In such cases, eligibility becomes intertwined with reputational risk assessment.

Instrument-level eligibility and its implications

Eligibility in IFSC cannot be separated from the nature of the security being listed. The same issuer may be comfortably eligible for a debt listing and face significant challenges in an equity listing.

Equity and equity-linked instruments invite close scrutiny of shareholder rights, transferability, and dilution mechanics. Structures that significantly deviate from international norms—such as disproportionate voting rights or restrictive transfer clauses—are not prohibited, but they require strong justification and disclosure.

Debt instruments enjoy greater structural flexibility, which explains the faster growth of IFSC debt listings. However, this flexibility does not dilute eligibility expectations. Credit quality, covenant design, trustee arrangements, and governing law choices are all examined for enforceability and investor protection.

Hybrid and structured instruments are permitted, but only where their economics are intelligible. Over-engineered products that rely on complex triggers or opaque valuation mechanisms often face eligibility-related questioning disguised as disclosure comments.

Jurisdictional permissibility and FEMA alignment

For Indian issuers, eligibility for IFSC listings is inseparable from exchange-control law. FEMA considerations are not treated as a separate compliance layer; they are embedded into the regulator’s assessment of whether the transaction makes sense.

The regulator examines whether the issuance, inflow, outflow, guarantees, and downstream utilisation of proceeds are permissible under Indian foreign exchange law. Misalignment here does not usually result in outright rejection, but it leads to extensive clarification requirements and potential restructuring.

Foreign issuers face similar scrutiny from the opposite direction. IFSCA looks at whether home-jurisdiction laws permit the issuance, whether proceeds can be repatriated, and whether any regulatory approvals are required abroad. Silence on these points is treated as a red flag.

How IFSCA actually tests eligibility during review

One of the most important practitioner insights is that IFSCA rarely uses the word “eligibility” in its comment letters. Instead, it asks questions that indirectly test it.

Questions about why IFSC is the appropriate market, how investor rights are protected, or how risks should be evaluated are not casual. They are signals that the regulator is assessing whether the issuer belongs in this market.

Issuers who respond defensively or mechanically often prolong the review cycle. Those who engage with the underlying concern—sometimes by enhancing disclosures rather than arguing technical compliance—tend to resolve eligibility issues more efficiently.

Eligibility and disclosure drafting: where most deals falter

In almost every delayed IFSC listing I have seen, eligibility issues surfaced because disclosures were drafted with a domestic mindset. The document technically complied with regulations but failed to communicate clearly with an international regulator and investor base.

Eligibility in IFSC is not proven by citing regulations. It is demonstrated by coherent drafting. When the business model, financials, governance, and risk factors align logically, eligibility ceases to be controversial.

Conversely, when disclosures feel forced, defensive, or inconsistent, the regulator probes deeper. At that point, eligibility becomes an obstacle rather than a starting point.

Wrap Up

In GIFT City, eligibility is not a gate you pass through once. It is a narrative you sustain throughout the offer document. Issuers who approach IFSC listings as a regulatory shortcut underestimate how closely IFSCA reads disclosures. Those who approach it as a genuine international capital-markets transaction find that eligibility questions resolve themselves through disciplined drafting. In IFSC, the document does the talking long before the regulator does.

About the Author

Prashant Kumar is a Company Secretary and Partner at Eclectic Legal, with hands-on experience in drafting and advising on DRHPs, information memoranda, and listing documentation for equity and debt issuances in GIFT City (IFSC). He regularly advises issuers, lead managers, and legal teams on eligibility positioning, disclosure strategy, and IFSCA review processes.
📞 +91-9821008011 | ✉️ prashant@eclecticlegal.com

FAQs on Eligibility for Listing Securities in GIFT City (IFSC)

1. Is there a minimum eligibility threshold like net worth, profitability, or track record for listing in GIFT City (IFSC)?

There is no single numerical eligibility threshold—such as minimum net worth, profitability, or years of operations—prescribed uniformly for listings in GIFT City. This is a conscious policy choice under the framework administered by the International Financial Services Centres Authority. However, issuers often misread this flexibility as a relaxation. In practice, IFSCA replaces bright-line tests with a credibility assessment driven by disclosures.

If an issuer lacks profitability or has a limited operating history, the regulator expects the offer document to compensate through clarity—on business sustainability, funding runway, sponsor support, use of proceeds, and downside risks. A loss-making issuer is not ineligible, but a poorly explained loss-making issuer effectively is. Eligibility, therefore, is established through the coherence of the financial narrative, not by ticking a financial threshold.

2. Can an unlisted Indian company directly list securities in GIFT City without a domestic IPO?

Yes, an unlisted Indian company can directly list securities in GIFT City without undertaking a domestic IPO. There is no regulatory requirement to be listed in India first. That said, this is one of the most misunderstood eligibility aspects in practice. While permitted, such issuers face heightened scrutiny on why IFSC is the appropriate market at their current stage.

IFSCA examines whether the issuer’s scale, governance maturity, disclosure depth, and investor proposition are aligned with an offshore, institution-led market. For unlisted Indian companies, eligibility issues often arise not from legal permissibility but from inadequate articulation of business fundamentals and governance practices. If the offer document reads like a domestic private placement memo rather than an international listing document, eligibility concerns surface quickly during review.

3. Are foreign companies subject to stricter eligibility standards than Indian issuers in IFSC?

Formally, foreign companies are not subject to stricter eligibility standards. Substantively, however, they are examined through different risk lenses. IFSCA focuses on enforceability of investor rights, regulatory equivalence, and capital mobility rather than on incorporation jurisdiction alone.

Foreign issuers must clearly demonstrate that shareholders or debenture-holders in IFSC can practically enforce their rights—whether through governing law provisions, dispute-resolution mechanisms, or recognition of judgments or arbitral awards. Financial statements must also be understandable and comparable, typically through IFRS or equivalent disclosures. A foreign issuer with strong disclosure discipline often clears eligibility faster than an Indian issuer relying on domestic compliance comfort.

4. Does past litigation or regulatory action make an issuer ineligible for IFSC listing?

No. There is no clean-track-record requirement in the IFSC listing framework. Ongoing litigation, tax disputes, or even past regulatory actions do not automatically disqualify an issuer. What matters is materiality, transparency, and contextual explanation.

IFSCA becomes concerned when issuers attempt to minimise or obscure material disputes. Litigation disclosures that are aggregated, vague, or strategically diluted almost always attract comments. In contrast, issuers who disclose adverse history candidly—explaining financial exposure, operational impact, and mitigation—rarely face eligibility objections. In IFSC listings, credibility matters more than perfection. Eligibility is lost not because of risk, but because of how risk is presented.

5. Is eligibility assessed separately for equity listings and debt listings in GIFT City?

Eligibility is always assessed in conjunction with the instrument being listed. The same issuer may be well-suited for a debt listing and poorly positioned for an equity listing. Equity instruments invite deeper scrutiny of shareholder rights, voting structures, dilution mechanics, and exit options. Any deviation from international norms must be clearly justified in the offer document.

Debt listings are structurally more flexible, which explains their faster growth in IFSC. However, eligibility still depends on enforceability of covenants, clarity of cash flows, credit support arrangements, and governing law. Unrated or structured debt is permitted, but weak disclosure or opaque risk allocation often becomes an eligibility issue during review rather than at the filing stage.

6. How does FEMA and exchange-control compliance affect eligibility for IFSC listings?

For Indian issuers, eligibility for IFSC listings is inseparable from FEMA compliance. IFSCA does not treat foreign exchange issues as a post-listing concern. It examines whether issuance, inflows, downstream utilisation of proceeds, guarantees, and repatriation mechanics are legally permissible and clearly disclosed.

Misalignment with FEMA rarely leads to outright rejection, but it frequently results in prolonged clarification cycles and structural modifications. For foreign issuers, the same logic applies in reverse—home-jurisdiction exchange controls, approval requirements, or capital-movement restrictions must be disclosed upfront. Silence on these aspects is often interpreted as an eligibility red flag. In IFSC, regulatory alignment is not assumed; it must be demonstrated through drafting.