Listing On Foreign Stock Exchanges: Looking Beyond Borders

INTRODUCTION

During the economic reforms of 1990s, drastic changes  were made to the economy by adoption of the  principles of liberalization, privatization and  globalization. Accordingly, as a part of this reform  initiative Indian companies were allowed to raise funds  from foreign stock exchanges indirectly through  depository receipts mechanism without an obligation  to list their shares on the Indian stock markets. Later, in  2005, restrictions were put on the Indian companies  from raising funds from foreign exchanges without  accomplishing listing in the Indian markets. However,  due to mediocre performance of the Indian capital  markets, Indian companies faced difficulties in raising  enough money from the capital market. Hence, to  combat this situation, Indian companies started setting  up offshore companies to gain entry to the foreign  stock markets. In this background, the government  decided to reform the legislation again and allow  companies to