MCA Relaxes Overseas Listing Norms to Allow Convertible Debentures and Permits Negative Net Worth Firms at GIFT IFSC — November 7, 2026

In a decisive move to widen access to foreign capital for Indian businesses, the Ministry of Corporate Affairs (MCA) has notified the Companies (Listing of Equity Instruments in Permissible Jurisdictions) Amendment Rules, 2026. The amendments significantly overhaul the direct listing framework originally notified in January 2024, lowering regulatory hurdles for unlisted public companies, high-growth startups, and turnaround enterprises seeking to raise capital on international exchanges at Gujarat International Finance Tec-City (GIFT City).

The regulatory changes broaden the scope of permissible fund-raising instruments, ease balance-sheet eligibility thresholds, and harmonize MCA rules with the International Financial Services Centres Authority (IFSCA) regulations.

Key Policy Changes Introduced

• Expansion to Equity Instruments: The government has replaced the narrower term "equity shares" with "equity instruments" across the framework. Indian issuers are now permitted to list convertible debentures and preference shares on international bourses alongside ordinary equity.
• Window for Negative Net Worth Firms: Companies that have eroded their net worth—typical of early-stage, fast-scaling tech startups and businesses undergoing financial turnarounds—can now list their securities abroad. This eligibility is contingent on the issuer allotting at least 75% of the net offer to Qualified Institutional Buyers (QIBs), ensuring substantial institutional backing to safeguard market integrity.
• Inclusion of IFSC Entities: The amended framework explicitly incorporates unlisted public companies operating within International Financial Services Centre (IFSC) jurisdictions, provided they comply with the IFSCA Act, 2019, and related listing regulations.
• Relaxed Cooling-Off Post-Debt Settlement: For companies that experienced loan payment defaults, the mandatory waiting period after clearing overdue debts to banks and financial institutions has been reduced from two years to more than six months before becoming eligible for overseas listings.
• Updated Compliance Filings: The amendment replaces the existing Form LEAP-1, specifying updated certification and disclosure guidelines that issuers must submit.

Deepening the GIFT IFSC Ecosystem

Currently, permissible overseas jurisdictions under the direct listing framework are anchored at GIFT IFSC, home to the India International Exchange (India INX) and NSE International Exchange (NSE IX), supervised by the IFSCA.

Allowing hybrid instruments such as convertible debentures and preference shares provides structured financing avenues that global venture capital, private equity, and institutional funds routinely utilize. Market experts note that aligning MCA rules with existing IFSCA issuance regulations removes technical discrepancies, streamlining cross-border capital acquisition without requiring Indian startups to shift holding structures outside the domestic regulatory perimeter.

However, the MCA maintained stringent base compliance requirements: companies that have defaulted on statutory annual return filings or financial statements must clear all backlogs before seeking an overseas listing window.