On July 9, 2020, the Securities and Exchange Board of India (“SEBI”) issued a circular in respect of amendments to the SEBI (International Finance Services Centres) Guidelines, 2015 (“Guidelines”) in order to further streamline the operations at international finance service centres (“IFSC”).
Pursuant to the amendment to the Guidelines, the eligibility and shareholding limit for stock exchanges desirous of operating in IFSCs has been revised.
Prior to the amendment, any Indian recognized stock exchange or any stock exchange of a foreign jurisdiction was permitted to form a subsidiary to provide the services of stock exchanges in IFSC wherein at least 51% (fifty one percent) of the paid up equity share capital were required to be held by such stock exchange and the remaining shares were permitted to be offered to, inter alia, any other recognised stock exchange, whether Indian or of foreign jurisdiction.
By way of the amendment, SEBI has permitted the remaining share capital of such subsidiary to be held by any other person (whether Indian or of foreign jurisdiction). However, such person shall not, at any time, directly or indirectly, either individually or together with persons acting in concert, acquire/ hold more than 5% (five percent) of the paid up equity share capital in a recognized stock exchange in IFSC, subject to applicable law.
Entities such as (a) stock exchanges; (b) depositories; (c) banking companies; (d) insurance companies; (e) commodity derivate exchanges, whether Indian or of foreign jurisdiction; (f) as well as public financial institutions of Indian jurisdiction; and (g) bilateral or multilateral financial institutions approved by the Central Government, may acquire/ hold, either directly or indirectly, either individually or together with persons acting in concert, up to 15% (fifteen percent) of the remaining paid up equity share capital of a recognized stock exchange with the prior approval of SEBI.
Further, the provisions of regulation 19 and 20 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, pertaining to eligibility for acquiring/ holding shares in a stock exchange and fit and proper criteria, will have to be complied with.
Read Circular here.
This update has been contributed by Aastha (Partner) and Radhika Kothari (Associate).
7A, 7th Floor, Tower C, Max House,
Okhla Industrial Area, Phase 3,
New Delhi – 110020
The rules of the Bar Council of India do not permit advocates to solicit work or advertise in any manner. This website has been created only for informational purposes and is not intended to constitute solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work in any manner. By clicking on 'Agree' below, you acknowledge and confirm the following:
a) there has been no solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;
b) you are desirous of obtaining further information about us on your own accord and for your use;
c) no information or material provided on this website is to be construed as a legal opinion and use of this website will not create any lawyer-client relationship;
d) while reasonable care has been taken in ensuring the accuracy of the contents of the website, Argus Partners shall not be responsible for the results of any actions taken on the basis of information provided in this website or for any error or omission in the website; and
e) in cases where the user has any legal issues, the user must seek independent legal advice.