By CS Prashant Kumar | Company Secretary & Compliance Officer | Global Horizons Capital Advisors (IFSC) Private Limited | GIFT City
Yes — and the legal framework to do it is already in place.
An eligible Indian public company can today list its existing equity shares on an internationally recognised stock exchange at GIFT City, Gujarat, without making a public offer, without issuing a single new share, and without raising any money. This is not a loophole or a proposed reform. It is a statutory right, supported by three instruments of law that have been in force since 2023 and 2024. What is being awaited is the detailed operational playbook from IFSCA — the specific forms, timelines and exchange-level mechanics — which is expected shortly.
This article explains what this route is, why it matters, how the law enables it, and what a company needs to do to pursue it.
First, Let Us Understand What a “Direct Listing” Actually Means
Most people are familiar with the concept of an IPO — Initial Public Offering. In an IPO, a company issues fresh shares to the public, collects money, and then lists those shares on a stock exchange so that investors can buy and sell them. The company raises capital; the public gets ownership. That is the traditional route.
A direct listing is fundamentally different. Here, no new shares are created and no money is raised by the company. Instead, the company’s existing shares — already held by founders, early investors, or other shareholders — are simply admitted to trading on a stock exchange. The company gains a listed presence, existing shareholders get the ability to sell their shares in an organised market, and new investors can buy those shares from existing holders. The company itself does not receive any proceeds from the listing.
Think of it this way. An IPO is like a company opening its doors to the public and selling tickets at a fixed price to raise money for expansion. A direct listing is like a company simply putting up a signboard that says “our shares are now available to be traded” — no new shares, no fundraise, just open access to an organised market.
In the context of GIFT IFSC, this means an Indian public company can list its shares on an internationally recognised exchange — India INX or NSE IFSC at GIFT City — without going through the full rigour of a domestic IPO, without SEBI oversight, and without the associated costs and timelines of a public offer. For many companies that are not yet ready for a full IPO but want a listed presence and global investor access, this is a genuinely transformative option.
Why GIFT IFSC? What Makes It Different?
GIFT City — the Gujarat International Finance Tec-City — is India’s only International Financial Services Centre (IFSC). Think of it as a separate financial jurisdiction sitting inside India’s borders. It has its own regulator (the International Financial Services Centres Authority, or IFSCA), its own set of regulations, and a tax environment that is specifically designed to be globally competitive.
The two stock exchanges operating within GIFT IFSC — India INX (promoted by BSE) and NSE IFSC (promoted by NSE) — are recognised stock exchanges that operate in US dollar terms, follow international trading hours, and cater to foreign and domestic institutional investors alike. A listing on these exchanges signals global ambitions, gives access to a different pool of investors than domestic exchanges, and comes with a tax structure that is far more favourable than listing in India.
Critically, because GIFT IFSC is a separate regulatory jurisdiction, SEBI’s domestic listing and disclosure framework does not govern this route. IFSCA governs it. This is what makes the direct listing route at GIFT IFSC genuinely distinct — it operates outside the SEBI framework, under a more internationally-oriented regulatory architecture.
The Three Pillars of the Legal Framework
The legal basis for this route rests on three instruments that must be read together. Each one plays a specific role, and together they create a complete framework. Let us walk through each one.
Pillar One — Section 23(3) and (4) of the Companies Act, 2013
Every significant corporate action in India ultimately traces back to the Companies Act, 2013 — the foundational legislation that governs Indian companies. The direct listing route at GIFT IFSC is no different.
In 2020, Parliament amended the Companies Act to add sub-sections (3) and (4) to Section 23. These provisions were brought into force on 30 October 2023 by an MCA notification. What do they say, in plain terms?
Sub-section (3) says that prescribed classes of public companies may issue securities for the purpose of listing on permitted stock exchanges in permissible jurisdictions. In other words, Parliament has expressly authorised Indian public companies to list their shares on designated foreign or international exchanges — not just on domestic exchanges like BSE or NSE.
Sub-section (4) gives the Central Government the power to exempt companies using this route from certain provisions of the Companies Act. This is significant because it recognises a practical reality: the GIFT IFSC listing route operates under IFSCA’s regulatory framework, not SEBI’s. Many Companies Act provisions that are designed for domestic SEBI-regulated listings would be inappropriate or redundant in this context. Sub-section (4) gives the government the flexibility to carve out those provisions as needed.
One important textual point: the provision says “for the purposes of listing” — not “for the purposes of raising capital” or “for the purposes of issuing new shares.” This phrase is broad enough to cover both fresh issuances and the listing of existing shares. It does not require a fundraise. This is the statutory foundation for a pure direct listing.
It is also worth noting that Section 23 draws a clear distinction between three routes: the public offer route (IPO or FPO through a prospectus), the private placement route, and this third route — listing on international exchanges under sub-section (3). Each is a separate and independent route. The direct listing route does not need to satisfy the conditions applicable to a public offer.
Pillar Two — The LEAP Rules, 2024
Having established the parent statutory power, the next question is: what are the detailed rules? That is where the LEAP Rules come in.
The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 — commonly called the LEAP Rules — were notified by the Ministry of Corporate Affairs on 24 January 2024. These are the subordinate rules framed under the Companies Act that translate the broad statutory power of Section 23(3) into an operational framework on the India side.
The LEAP Rules do four important things. First, they identify GIFT City (IFSC) as the one and only permissible jurisdiction for the purpose of Section 23(3). This means, at present, GIFT IFSC is the only international location where Indian companies can seek to list under this route. Second, they designate two permitted stock exchanges — India INX and NSE IFSC — as the exchanges on which listing can be sought. Third, they set out the eligibility conditions that a company must satisfy before it can list. Fourth, and most importantly for our purposes, they contain a provision that expressly enables a direct listing without a fundraise.
That provision is the Explanation to Rule 4(1), which deserves to be understood carefully. Rule 4(1) says an eligible unlisted public company may “issue equity shares” for the purposes of listing. Read literally, this might seem to require a fresh issuance of shares. But the Explanation clarifies that for the purposes of this rule, “issue of equity shares” shall include an offer for sale of equity shares by existing shareholders of the unlisted public company for listing on a stock exchange in a permissible jurisdiction.
In plain terms, this Explanation makes clear that a transaction where existing shareholders are simply listing their already-held shares — without the company issuing anything new — is fully within the scope of the LEAP Rules. This is the India-side legal basis for a pure direct listing by an unlisted public company.
The LEAP Rules also set out who is not eligible. Companies with negative net worth, companies with outstanding public deposits, companies that have defaulted on loans to banks or financial institutions, companies facing insolvency or winding-up proceedings, and companies that have not filed their annual returns or financial statements with the Registrar of Companies on time — all of these are ineligible. The rationale is straightforward: the direct listing route is intended for companies in good financial and legal standing, not for companies trying to use a foreign listing to sidestep domestic regulatory scrutiny.
One more feature of the LEAP Rules that is worth understanding: a company that lists at GIFT IFSC under this route does not become a “listed company” for the purposes of the Indian Companies Act. Rule 2A(c) of a related set of rules (the Companies Specification of Definitions Details Rules, 2014) expressly provides that a public company whose shares are listed only on a GIFT IFSC exchange — and not on any recognised Indian stock exchange — continues to be treated as an unlisted company under the Companies Act. This matters practically because it means the company does not have to comply with the full suite of Companies Act provisions that apply to listed Indian companies. It does, however, become subject to IFSCA’s listing regulations for disclosure and corporate governance — which are internationally benchmarked and in many ways more appropriate for a company with global investor ambitions.
Pillar Three — IFSCA (Listing) Regulations, 2024
The third pillar is the IFSCA (Listing) Regulations, 2024, notified on 20 August 2024 and effective from 29 August 2024 (subsequently amended in October 2025). These regulations are the IFSC-side framework — the rules that IFSCA, as the regulator of GIFT IFSC, has framed to govern how listings at GIFT IFSC exchanges are conducted.
Chapter IV of these regulations — titled “Listing of Specified Securities Without Public Offer” — is the directly relevant chapter. Regulation 40 within this chapter provides for listing of specified securities by eligible companies without undertaking a public offer.
What does Regulation 40 contemplate in substance? It allows an eligible company to list its existing shares on a recognised GIFT IFSC exchange without making a fresh issue at the time of listing, without offering shares to the public through a prospectus, and on the basis of an information memorandum — a disclosure document that is less onerous than a full prospectus — rather than a full-blown offer document. The information memorandum provides investors with the information they need to understand the company, but the company is not “selling” shares to the public in the traditional sense.
The IFSCA’s own press release of 30 August 2024, issued when these regulations were notified, made the intent explicit. The regulations are designed to give impetus to listing by unlisted Indian companies and by foreign companies. Indian companies listing under these regulations must also comply with the Direct Listing Scheme under the FEMA (Non-Debt Instruments) Rules, 2019 — which is the foreign exchange law framework governing pricing, permissible holders, and sectoral caps applicable to shares held by foreign investors.
The Tax Advantage — Why GIFT IFSC Makes Financial Sense
Beyond the regulatory framework, the tax treatment of transactions on GIFT IFSC exchanges is one of the most compelling reasons to consider this route.
Transactions executed on GIFT IFSC exchanges are exempt from Securities Transaction Tax (STT), Commodities Transaction Tax (CTT), and stamp duty. For context, on domestic exchanges, STT and stamp duty are levied on every transaction and represent a meaningful cost for active traders and institutional investors. The absence of these levies at GIFT IFSC makes the market considerably more cost-efficient.
More significantly, Section 47(viiab) of the Income Tax Act provides that capital gains arising from the transfer of securities listed on a recognised stock exchange in an IFSC — where the consideration is received in foreign currency — are exempt from capital gains tax. This is an extraordinary provision. It means that investors who buy and sell shares listed on GIFT IFSC exchanges, and settle those transactions in foreign currency, do not pay capital gains tax on their profits. For foreign institutional investors in particular, this significantly improves the after-tax return on investment, making GIFT IFSC-listed securities a genuinely attractive asset class.
What a Direct Listing at GIFT IFSC Actually Looks Like — The Transaction Journey
For a company and its advisors working through this transaction, the process — once the IFSCA operational framework is in place — would broadly unfold as follows.
The starting point is an eligibility check. The company and its advisors review the Rule 5 disqualifications under the LEAP Rules and the conditions under the FEMA Direct Listing Scheme to confirm the company is eligible. This is not merely a formality — it requires a careful review of the company’s financial position, its corporate history, and its FEMA compliance record.
Once eligibility is confirmed, the company obtains the necessary corporate approvals — board resolutions and shareholders’ approvals. If the transaction is being structured as an offer for sale by existing shareholders (rather than a fresh issuance), the selling shareholders are identified at this stage.
The shares to be listed must be held in dematerialised form — meaning they must be held through a depository (like NSDL or CDSL) in electronic form, not as physical share certificates. The listed shares must rank equally with the company’s other shares of the same class.
The company then prepares its disclosure document — an information memorandum under Regulation 40, or a prospectus in e-Form LEAP-1 where required under the LEAP Rules. This document is the primary disclosure to investors and must comply with the content requirements prescribed by IFSCA and the exchanges.
Alongside this, FEMA compliance must be addressed — the pricing of the shares, the categories of investors who are permitted to hold them, and the applicable sectoral foreign investment caps under Schedule XI to the FEMA (NDI) Rules, 2019.
The company then goes through the exchange-level processes — in-principle approval and final listing approval from India INX or NSE IFSC (or both). Once approved, the shares are admitted to trading.
Post-listing, the company is subject to continuous disclosure and corporate governance obligations under Chapter XII of the IFSCA Listing Regulations — periodic financial reporting, disclosure of material events, related party transaction disclosures, and so on.
What Is Still Being Awaited
To be clear about where things currently stand: the statutory and regulatory framework is fully in place. Section 23(3) of the Companies Act, the LEAP Rules, and Regulation 40 of the IFSCA Listing Regulations are all operational law. The foundation is solid.
What is not yet in place is the IFSCA’s detailed operational framework — the specific procedural guidelines, standard forms, prescribed timelines, and exchange-level mechanics that will tell companies and their advisors exactly how to navigate the process from start to finish. This is the practical plumbing that converts regulatory permission into executable transactions, and we understand it is under active consideration by IFSCA.
Companies evaluating this route should therefore do their eligibility assessment, structure planning, and pre-transaction groundwork now — and be ready to move when the operational framework is published.
Who Should Be Looking at This Route?
The direct listing route at GIFT IFSC is not for every company. But for the right company, it can be genuinely transformative.
Companies that are strong candidates for this route are typically unlisted public companies with a clean compliance record, positive net worth, and no outstanding defaults to financial institutions. They are companies that have international business interests, a shareholder base that includes or wishes to attract foreign institutional investors, or ambitions to access global capital markets without committing to a full domestic IPO. They may be in sectors where global investor interest is high — technology, deep-tech, fintech, pharmaceuticals, clean energy — and where a GIFT IFSC listing provides genuine visibility with the right investor audience.
For promoters and early-stage investors in such companies, a GIFT IFSC direct listing offers a pathway to liquidity that does not require diluting the company or going through the lengthy and expensive process of a domestic IPO.
Looking Ahead
India’s GIFT IFSC has been described as the country’s answer to Singapore’s MAS or London’s FCA — a world-class financial jurisdiction built within Indian borders. The direct listing framework now in place is a concrete demonstration of that ambition. It gives Indian companies a route to global capital markets that is grounded in statute, supported by well-crafted subordinate legislation, and backed by a favourable tax environment.
For companies that are eligible and well-advised, this route represents a genuine opportunity. The regulatory groundwork has been done. The framework is ready. The question now is whether Indian companies — and their advisors — are paying attention.
Frequently Asked Questions
Can an Indian company list shares on GIFT IFSC without doing an IPO? Yes. Under Section 23(3) of the Companies Act 2013, read with the LEAP Rules 2024 and Regulation 40 of the IFSCA (Listing) Regulations 2024, an eligible Indian public company can list its existing equity shares on India INX or NSE IFSC without a public offer and without raising any fresh capital.
Does the company remain “unlisted” after a GIFT IFSC listing? Yes. A company listed only on GIFT IFSC exchanges — and not on any Indian recognised stock exchange — continues to be treated as an unlisted company under the Companies Act. It is, however, subject to IFSCA’s listing regulations for disclosure and corporate governance.
What is the tax treatment for investors in GIFT IFSC-listed shares? Transactions on GIFT IFSC exchanges are exempt from STT, CTT and stamp duty. Capital gains on transfer of GIFT IFSC-listed securities settled in foreign currency are exempt under Section 47(viiab) of the Income Tax Act.
What is still pending before transactions can close? The enabling law is fully in place. What is pending is IFSCA’s detailed operational framework — the specific procedural guidelines, standard forms and exchange-level mechanics for the direct listing without public offer route.
About the Author
Prashant Kumar is a Company Secretary, Published Author, and a seasoned professional in corporate and financial services regulation. He currently serves as Company Secretary & Compliance Officer at Global Horizons Capital Advisors (IFSC) Private Limited, an IFSCA-licensed Investment Banker based in GIFT City, with direct, on-ground exposure to capital market transactions within the IFSC ecosystem.
He brings hands-on experience in IPOs, direct listings, and exchange listings, along with deep expertise in GIFT IFSC structuring, fund setup (FME & AIF), corporate governance, and regulatory compliance. He regularly advises fund managers, startups, and institutions on building globally aligned, execution-ready structures.
For professional discussions on GIFT IFSC, IPOs, listings, fund structuring, and regulatory strategy, he can be reached at +91 9821008011 or prashant.kumar@global-horizons.in.
This article is based on publicly available legislation and regulatory notifications. It does not constitute legal or financial advice. Specific transactions should be evaluated with reference to applicable law at the relevant time.
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