IFSCA Brings New Direct Listing Rules For GIFT City Exchanges
The regulations also include specific obligations for Special Purpose Acquisition Companies (SPACs)
The International Financial Services Centres Authority on Friday announced new regulations for direct stock listings on the exchanges in GIFT City. This move opens the door for both foreign entities and domestic startups to list on the financial hub’s exchanges, potentially attracting offshore investors.
According to the new rules, the minimum issue size for a listing is set at USD 50 million, though this amount may change based on future updates by the Authority. Sponsors of the listing must retain between 15% and 20% of the post-issued paid-up capital. Prior to the initial public offering or IPO, sponsors must also have subscribed to at least USD 10 million or 2.5% of the issue size, whichever is lower.
The pricing of the issue must be determined through a fixed price mechanism, with the issuer consulting with lead managers. The IPO must be open for at least one working day but no more than ten working days. Underwriting is allowed, but at least 50% of the underwriting commission must be deferred until the successful completion of the business combination and held in an escrow account.
For applications, the minimum size is USD 100,000. Allotment of shares will be either proportionate or discretionary, as detailed in the offer document. Issuers and lead managers must ensure that payments and refunds are completed within five working days after the issue closes.
The regulations also include specific obligations for Special Purpose Acquisition Companies (SPACs). The proceeds from SPAC IPOs must be held in an interest-bearing escrow account and can only be invested in short-term, investment-grade instruments. These funds can be used for taxes or general working capital with prior approval from shareholders.
For SPACs, the detailed prospectus must include comprehensive information about the target companies, the business combination process, and the resultant entity. Shareholders have the right to redeem their securities if they vote against the business combination.
After the business combination, the new entity must meet listing criteria and comply with ongoing disclosure requirements, with sponsor and key management shares locked up for one year.
