Amendments and Notifications from the Ministry of Corporate Affairs (January 2024)

The Ministry of Corporate Affairs, on 24^th January, 2024 introduced a significant notification containing the Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024. These rules aim to streamline and regulate the process of listing equity shares in permissible jurisdictions, ensuring transparency, compliance, and investor protection in accordance with the regulatory framework established by the Ministry of Corporate Affairs and SEBI.
Given below are the salient features of the Rules:

Applicability:

(a) Unlisted public companies; (b) Listed public companies, in accordance with regulations framed by the Securities and Exchange Board or the Authority, issuing securities for listing on permitted stock exchanges in permissible jurisdictions.

Listing on permitted stock exchanges:

• Unlisted public companies without partly paid-up shares may issue equity shares for listing on a stock exchange in a permissible jurisdiction.
• The company or its existing shareholders must comply with the requirements of the Scheme.
• Listing of equity shares on permitted stock exchanges must also comply with conditions specified by the Securities and Exchange Board of India.

Filing requirements:

• The unlisted public company must file the prospectus in e-Form LEAP-1 specified in the Second Schedule within seven days after finalization and filing in the permitted exchange.

Compliance:

• After listing equity shares on a permitted stock exchange, the company must adhere to Indian Accounting Standards outlined in the Companies (Indian Accounting Standards) Rules, 2015, in addition to any other required accounting standards for preparing financial statements filed with the relevant securities regulator or stock exchange.

Ineligibility:

• A company is ineligible for issuing equity shares for listing under these rules if it:

(a) is registered under section 8 or declared as Nidhi under section 406 of the Act;

(b) is a company limited by guarantee with share capital;

(c) has outstanding public deposits as per Chapter V of the Act;

(d) has a negative net worth;

(e) has defaulted in payment to banks, financial institutions, or creditors, unless the default has been rectified for at least two years;

(f) has applied for winding-up under the Act or the Insolvency and Bankruptcy Code, 2016, or if winding-up proceedings are pending;

(g) has defaulted in filing annual returns or financial statements within the specified period under sections 92 and 137 of the Act.[1]

[1] https://www.mca.gov.in/bin/dms/getdocument?mds=qcIDsiX0Le%252F2EMv7m1iyEw%253D%253D&type=open