Direct Listing Without Public Offer in GIFT City: A New Listing Route for Unlisted Companies
India’s capital-market ecosystem is gradually expanding beyond the conventional initial public offering model. Several established, promoter-funded and venture-backed companies may not require immediate capital but may still seek liquidity for existing shareholders, transparent price discovery, international visibility and stronger corporate governance.
The International Financial Services Centres Authority has proposed a regulatory framework that would allow eligible companies to list equity shares and convertible securities on recognised stock exchanges in GIFT IFSC without undertaking a public offer. The proposal seeks to operationalise Regulation 40 of the IFSCA (Listing) Regulations, 2024 and create an alternative route between private ownership and a traditional IPO.
The framework was issued through a consultation paper dated 13 July 2026. Accordingly, the provisions discussed below remain proposals and may change before issuance of the final circular.
What Is Direct Listing Without Public Offer?
Direct listing without public offer allows an unlisted company to admit its existing securities to trading on a recognised stock exchange without conducting a conventional IPO.
Under the proposed framework, the company would not ordinarily be required to:
- issue fresh shares to the public;
- conduct book building;
- obtain underwriting commitments;
- undertake an IPO allocation process; or
- raise fresh capital at the time of listing.
Instead, the company’s existing equity shares or convertible securities would be listed and made available for secondary-market trading. Existing shareholders may subsequently sell their securities through the exchange, subject to applicable regulatory and trading requirements.
The route may be relevant for companies that have already raised sufficient capital from founders, private equity funds, venture capital investors, family offices or institutional investors. Such companies may not require immediate funding but may still want a recognised market price, liquidity for shareholders and the governance benefits associated with listed status.
Direct listing without public offer is distinct from a conventional IPO, private placement, offer for sale and secondary listing. Its primary objective is listing and liquidity rather than immediate fundraising.
Why Has IFSCA Proposed the Direct Listing Framework?
The proposed GIFT IFSC direct listing framework seeks to address the requirements of financially mature companies that do not presently need fresh capital.
Such companies may nevertheless seek to:
- provide an exit or liquidity route to early investors;
- improve transparency and financial disclosures;
- establish an observable market valuation;
- enhance corporate governance;
- increase visibility among international investors;
- provide potential liquidity to employees holding shares or ESOPs;
- use listed shares in future strategic transactions; and
- prepare for subsequent capital raising.
A conventional IPO may involve significant issue-management, legal, audit, underwriting, marketing and compliance costs. It can also result in dilution of existing shareholders.
Direct listing may offer an alternative where the company’s principal objectives are market access, price discovery and shareholder liquidity.
In preparing the proposed framework, IFSCA examined international practices followed by the New York Stock Exchange, Nasdaq, London Stock Exchange and Tokyo Stock Exchange. These exchanges permit different forms of listing without a traditional public offer, although they generally impose financial, market-value, public-float and disclosure standards to protect investors and support liquidity.
Who Can Use the Proposed Direct Listing Route?
The proposed circular applies to an issuer whose specified securities are not already listed on any stock exchange in India, GIFT IFSC or a foreign jurisdiction.
The route is therefore intended primarily for a company undertaking its first listing.
An eligible issuer must:
- be presently unlisted;
- propose to list on a recognised stock exchange in GIFT IFSC;
- list equity shares or convertible securities; and
- undertake the listing without making a public offer.
A company that is already listed in India or overseas would generally need to examine the separate regulatory provisions relating to secondary listing, dual listing or listing of other permitted securities.
The proposed route may therefore be particularly relevant for Indian and foreign unlisted companies seeking access to an international financial centre without undertaking a conventional IPO.
Financial Eligibility for Direct Listing in GIFT City
An issuer would be eligible to list its securities without public offer where it satisfies at least one of the following criteria:
| Eligibility route | Proposed requirement |
|---|---|
| Operating revenue | At least USD 20 million in the last financial year or average of the last three financial years |
| Pre-tax profit | At least USD 1 million in the last financial year or average of the last three financial years |
| Post-listing market capitalisation | At least USD 50 million |
These are alternative conditions. The issuer would not be required to satisfy all three.
The revenue and pre-tax profit thresholds are broadly aligned with the eligibility requirements applicable to companies undertaking a public offer under the IFSCA Listing Regulations.
However, the proposed post-listing market-capitalisation threshold is USD 50 million, compared with the lower USD 25 million alternative threshold applicable under the public-offer framework.
The higher threshold recognises the additional challenges associated with direct listings. Unlike a traditional IPO, there is no institutional allocation, underwriting arrangement, book-building process or fresh distribution of securities among investors.
The requirement is therefore intended to ensure that companies using the route have adequate financial scale and market maturity.
An issuer having superior-right equity shares may also undertake direct listing, provided the issuance was approved by shareholders at a general meeting and such shares were held for at least three months before filing the Information Document.
Direct Listing Versus Conventional IPO
| Particular | Conventional IPO | Direct listing without public offer |
|---|---|---|
| Primary objective | Fundraising and listing | Listing, liquidity and price discovery |
| Fresh issue | Commonly undertaken | Not required |
| Public offer | Required | Not undertaken |
| Book building | Generally applicable | Not contemplated |
| Underwriting | May be arranged | Generally absent |
| Main document | Offer document | Information Document |
| Pricing | Fixed price or book building | Independent valuation and pre-open session |
| Dilution | May arise | No necessary dilution |
| Share distribution | Through public allocation | Existing public float required |
| Market-capitalisation threshold | USD 25 million alternative | Proposed USD 50 million alternative |
Direct listing may reduce certain issuance-related costs and avoid immediate dilution. However, it does not eliminate the need for due diligence, audited financial information, independent valuation, regulatory filings and continuing listed-company compliance.
It should therefore not be viewed as a simplified or lightly regulated substitute for an IPO.
Proposed Direct Listing Process in GIFT IFSC
The proposed process would broadly involve the following stages:
- Preliminary assessment of financial eligibility, legal structure and shareholding.
- Appointment of one or more IFSCA-registered investment bankers.
- Application to a recognised GIFT IFSC stock exchange for in-principle approval.
- Preparation of an Information Document containing material disclosures.
- Financial, legal, tax and regulatory due diligence.
- Submission of the investment banker’s due-diligence certificate.
- Independent valuation for determination of the base price.
- Filing of the Information Document with IFSCA and the stock exchange.
- Special pre-open price-discovery session on the first day of listing.
- Admission of securities to secondary-market trading.
The recognised stock exchange is proposed to approve or reject the application within 15 days after receiving complete information. Before rejecting an application, the exchange must provide the issuer an opportunity to submit written representations.
The Information Document would include disclosures relating to the company’s business, capital structure, management, financial statements, related-party transactions, shareholders’ agreements, litigation, regulatory actions, pending approvals and material risks.
Minimum Public Shareholding and Liquidity Considerations
An Indian company, including one incorporated in GIFT IFSC, would be required to comply with the minimum public-shareholding norms under Rule 19A of the Securities Contracts (Regulation) Rules, 1957.
A foreign issuer would also be required to maintain public shareholding of at least 10% of its post-listing capital on a continuous basis.
This has important practical implications. A closely held company cannot obtain listed status while retaining its entire capital with promoters or controlling shareholders. It must establish and maintain an adequate public float.
Further clarity may be required regarding the mechanism for achieving the 10% public shareholding, classification of public shareholders, treatment of ESOP holders, minimum shareholder dispersion and promoter-related holdings.
The proposed circular permits appointment of market makers, but does not make market making mandatory. Consequently, satisfying the minimum public-shareholding percentage may not automatically ensure active trading or efficient price discovery.
Strategic Benefits for Companies and Investors
For companies, direct listing in GIFT City may provide international listed status without immediate capital dilution. It can establish a transparent market valuation, improve institutional visibility, strengthen governance and support future fundraising or strategic transactions.
For promoters, private equity funds, venture capital investors and family offices, the framework may create a regulated partial-exit and liquidity opportunity without requiring the company to undertake a full IPO.
For employees holding shares or vested ESOPs, listing may provide an observable market value and a potential liquidity avenue, subject to securities laws, plan terms and trading restrictions.
Conclusion
The proposed framework could become an important bridge between private ownership and a conventional IPO. However, successful direct listing will require careful assessment of eligibility, public shareholding, valuation, investor demand and regulatory readiness.
Connect with Nexpective Advisors for a structured GIFT IFSC direct-listing readiness assessment and transaction advisory support.
