Monday, January 29, 2024

Understanding the New LEAP Rules for Indian Companies Listing Abroad


Indian companies have historically faced challenges in attracting global investors, mainly due to complex financial instruments and stringent regulations. To address this, the Indian Government introduced the LEAP (Listing of Equity shares Abroad by Public companies) Rules in 2024. These rules aim to simplify the process for Indian companies to list their shares on global stock exchanges, thereby easing access to foreign investments.

The Laws Involved

  1. LEAP Rules: These rules establish the criteria Indian companies must meet to list their shares on foreign exchanges. They include requirements for filing financial documents and adhering to Indian accounting standards.

  2. NDI Rules: The Non-Debt Instruments Rules outline the conditions for issuing and listing shares, including company eligibility, voting rights, and pricing guidelines.

  3. ILS Regulations (2021): These regulations provide detailed guidelines for issuing and listing securities on exchanges in the International Financial Services Centre (IFSC) in India.

Eligibility for Listing Abroad

Eligible Companies:

  • Must be public Indian companies, either listed or unlisted.
  • Must meet specific criteria such as not being barred from the capital market and not having willful defaulters as directors.

Ineligible Companies:

  • Those with partly paid-up shares, Section 8 companies, etc.
  • Companies with negative net worth or defaulting on payments are also restricted.

Private Companies:

  • Private companies are not eligible to invite public investment in their securities.

Rules for Different Types of Companies

  • Unlisted Public Indian Companies: Must adhere to specific sections of NDI Rules, LEAP Rules, and ILS Regulations.
  • Listed Public Indian Companies: Must comply with relevant sections of NDI Rules, LEAP Rules (as per SEBI regulations), and ILS Regulations. SEBI is expected to release more guidelines for these companies.

Rules for Investors (Permissible Holders)

  1. Only "permissible holders" can invest, trade, or hold shares. Special approval is required for holders from countries sharing a land border with India.

  2. Companies in sectors where Foreign Direct Investment (FDI) is prohibited cannot issue shares under this scheme.

Responsibilities and Rules for Companies

  1. Companies must follow various Indian laws and regulations and cooperate with both Indian and Foreign Depositories.

  2. Voting rights must be directly exercised by permissible holders or their custodians.

  3. Pricing must adhere to NDI Rules. Listed companies should price shares at least equal to domestic investor prices, while unlisted companies use a book-building process.

  4. Unlisted companies planning to list both domestically and internationally must comply with specific conditions set by SEBI.

We are giving a detailed checklist for Indian companies planning to raise funds under the new LEAP (Listing of Equity shares of Public companies in foreign jurisdictions) Rules. This checklist will cover in greater depth the steps and considerations for each phase of the process:

PhaseChecklist ItemDetails/Actions
EligibilityLegal StructureConfirm the company is legally structured as a public limited company in India.
SEBI and RBI ComplianceEnsure compliance with all relevant SEBI guidelines and RBI regulations, including adherence to foreign exchange management rules.
Financial Health CheckAudit financial statements to confirm positive net worth, profitability, and no history of default on borrowings.
Review FDI PolicyEnsure the business sector aligns with FDI norms and there are no restrictions on receiving foreign investments.
Pre-Listing PreparationBoard and Shareholder ApprovalObtain board resolution and shareholder consent for the listing, ensuring compliance with the Companies Act, 2013.
Appoint Advisors and UnderwritersEngage experienced legal, financial, and underwriting advisors familiar with international listings.
Due DiligencePerform comprehensive legal and financial due diligence, covering corporate governance, financial health, legal compliances, and risk factors.
Draft Prospectus and Other DocumentsPrepare detailed prospectus, including business description, risk factors, financial statements, and use of proceeds.
SEBI ClearanceSubmit the draft prospectus to SEBI for vetting and clearance, addressing any queries or concerns raised.
Compliance with NDI and LEAP RulesEnsure adherence to pricing, disclosure, and other regulatory requirements as specified under NDI and LEAP Rules.
FEMA ComplianceIf required, seek RBI's approval under the Foreign Exchange Management Act for the listing.
Listing ProcessSelection of Foreign ExchangeIdentify and select a suitable foreign stock exchange considering factors like market depth, investor base, and regulatory environment.
Comply with Foreign Exchange's RulesFulfill all the listing requirements of the chosen foreign exchange, which may include specific financial disclosures, corporate governance standards, and other regulatory compliances.
Share Pricing and AllocationAdhere to fair pricing guidelines and decide on the allocation of shares among different categories of investors.
Regulatory Filings in Foreign JurisdictionFile all required documents with the foreign regulator, including the prospectus, and respond to any queries or feedback.
Post-Listing ComplianceOngoing Regulatory AdherenceComply with continuous disclosure requirements, both in India and the foreign jurisdiction, including financial reporting, insider trading regulations, and other corporate disclosures.
Regular Filings and CommunicationFile periodic reports and maintain communication with shareholders and regulators in both countries.
Taxation ComplianceAdhere to Indian and foreign tax laws, including double taxation avoidance agreements, transfer pricing norms, and repatriation of funds.
Record-keepingMaintain detailed records of all foreign investments, earnings, and repatriations for regulatory and audit purposes.
Additional ConsiderationsCustodian ArrangementsEngage with custodians or depositories for managing shares held by foreign investors.
Market MonitoringRegularly review the performance of shares in the foreign market and take necessary actions based on market feedback and trends.
Continuous Legal and Financial AdvisoryMaintain ongoing engagement with legal and financial advisors to navigate evolving regulatory landscapes and manage risks associated with cross-border listings.


The introduction of LEAP Rules in 2024 marks a significant milestone for Indian companies seeking global expansion. By simplifying the process of international share listing and ensuring regulatory compliance, these rules open new doors for investment and foster international business relations. This strategic move is expected to boost foreign investment inflows, unlock growth opportunities, and offer Indian companies greater flexibility in accessing global capital markets.

This detailed checklist provides a comprehensive overview of the steps and considerations for an Indian company planning to list its equity shares on a foreign exchange under the new LEAP rules. It's important for companies to work closely with legal and financial experts to navigate this complex process effectively.