Tuesday, September 22, 2009

Dual Listing May Not Be Possible !!

India will have to amend host of laws and make rupee fully convertible before allowing dual listing of shares as is being proposed by the South African telecom major MTN.

Dual listing is not feasible in short term as there are amendments required in FEMA to allow full capital convertibility. These are major bottlenecks.

Moreover, Dual listing is not popular globally.

The government will have to amend Companies Act to allow dual listing, which is not allowed currently.

Pointing out that Dual listing faces number of bottlenecks which need to be taken care of in advance, SMC Capital Equity head Jagannadham Thunuguntla said, “If the government is committed for dual listing, it can be feasible. However, there are huge challenges and the process will take some time.”

He further said that there are many regulatory hurdles before it to become feasible. “Amendments are required in FEMA regulation, capital account convertibility, listing agreement,” he added.

The dual-listed companies retain their separate legal identities while being listed on both stock exchanges.

Besides, they also enjoy equal voting rights.

RBI appointed Tarapore Committee has suggested that India should go for fuller capital account convertibility in stages.

Amid merger talks between Bharti and MTN, the government recently said it is examining the issue of dual listing of the South African firm as per Indian laws.

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