Indian companies shares got a visa

To get access to the capital many companies get listed on the stock market. Where investors who believe that the company will do well in the future buys its share. In India, only around 3% of people invest in the stock market which limits the amount of capital a company can raise.

To get access to more capital companies tried to raise money from foreign investors but they were not allowed to be listed directly on any foreign stock exchange until yet.

However, companies still used to raise money from foreign investors using Depositary Receipts (DRs).

In the DR process, the company sells its shares to a local bank. These banks keep the shares safe in their custody. Meanwhile, the partner bank from overseas creates and publishes a new share called depository receipt or DR. The receipt derives its value from underlying shares in India. Once the overseas bank issues these DRs, foreign investors can buy and sell them on a foreign stock exchange using their local currency. So effectively, they can lay their hands on the Indian company's stock.

Unfortunately, some foreign investors exploited loopholes in this method, manipulating stock prices and causing losses for Indian investors. This unfair practice is the secondary reason for allowing Indian companies direct listings on foreign exchanges with the primary reason of raising money. 

Initially, only listed companies will be allowed to be listed on the foreign stock exchanges but the government soon going to introduce regulations for the unlisted companies to be directly listed in the foreign market without being listed in the Indian market.

This step can help India Unicorn and established institutions like Reliance raise more money.

we will soon get more information about it from the government

Until then…

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