The International Financial Services Centres Authority (IFSCA) has fundamentally broadened the scope of instruments and entities eligible for listing in permissible jurisdictions. This means a wider array of Indian companies, including certain unlisted public companies in IFSCs, can now tap into global capital markets through IFSC gateways.
This IFSCA Notification 2026, issued on 04 November 2026, significantly amends the Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024, shifting the paradigm from just “equity shares” to a more inclusive “equity instruments.”
What Changed: The 30-Second Answer
The IFSCA, through its Notification titled “The Companies (Listing of equity instruments in permissible jurisdictions) Amendment Rules, 2026” issued on 04 November 2026, has expanded the types of financial instruments and companies eligible for listing in permissible jurisdictions. The key change is the replacement of “equity shares” with “equity instruments,” now explicitly including convertible debentures and preference shares. Furthermore, certain unlisted public companies within IFSC jurisdictions are now permitted to list, provided they comply with the IFSCA Act, 2019, and its regulations.
What Does This IFSCA Notification 2026 Say?
This IFSCA Notification 2026 introduces several critical amendments to the Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024. The central theme is an expansion of what can be listed and who can list it. Specifically, the rules now refer to “equity instruments” instead of merely “shares.”
The core definitional change is found in the insertion of clause (ba) in sub-rule (1) of rule 2 of the principal rules. This new clause clarifies that “equity instruments” encompass “equity shares, convertible debentures, preference shares issued by an Indian Company.” This is a significant shift, broadening the types of securities that Indian companies can list in permissible jurisdictions. Previously, the framework was limited strictly to equity shares, which restricted the financial products companies could offer to international investors.
Beyond instrument types, the amendments also clarify and expand the categories of companies eligible for listing. In rule 3 of the principal rules, clause (a) now explicitly excludes “public companies in the International Financial Services Centres jurisdiction” from the general restriction on companies. This means such public companies are treated differently. Immediately following this, a new clause (c) is inserted, specifically permitting “unlisted public companies in the International Financial Services Centres jurisdiction” to list. This permission is contingent on these companies adhering to the provisions of the International Financial Services Centres Authority Act, 2019, and its associated regulations. This move clearly signals the IFSCA’s intent to foster deeper capital market activity within IFSCs, consistent with its broader mandate, as seen in other recent initiatives such as the IFSCA allowing differential distribution for venture capital and restricted schemes.
The notification also modifies eligibility criteria for companies with negative net worth. Previously, companies with negative net worth faced significant hurdles. Now, a company with negative net worth is eligible to issue its equity instruments for listing if “the issuer undertakes to allot at least seventy-five per cent. of the net offer to qualified institutional buyers in accordance with the regulations framed in this regard by the respective securities market regulator in permissible jurisdiction for purpose of this rule.” This proviso in clause (d) of rule 5 provides a pathway for companies that might be in a growth phase or have temporary financial challenges but can attract substantial institutional investment.
Furthermore, the amendment reduces the look-back period for defaults on outstanding dues to banks or financial institutions. In clause (e) of rule 5, the words “two years” are replaced with “more than six months” in the proviso. This means a company will be considered ineligible if it has defaulted on such dues for “more than six months,” rather than the previous “two years.” This tightens the financial discipline requirements for prospective issuers. Additionally, clause (g) of rule 5 now adds “and such default has not been made good” after “specified period,” reinforcing that merely correcting a default after a prolonged period might not be sufficient if it wasn’t made good within the specified timeframe.
Finally, the notification replaces Form LEAP – 1 in the Second Schedule with an updated version. This form, used for submitting a prospectus with the Registrar, now explicitly references “Listing of equity instruments in permissible jurisdictions – 1” and includes fields for Corporate Identity Number (CIN), company name, address, email ID, purpose of application (filing of prospectus), dates of approval and submission with the securities regulator/stock exchange, and information regarding pending inspection, investigation, or inquiry under the Companies Act, 2013. The updated form also requires attachments for regulator approval, prospectus filing acknowledgment, and the prospectus itself, along with a declaration from the company and a certificate from a practicing professional (Chartered Accountant, Cost Accountant, or Company Secretary).
Who Does This Apply To?
This IFSCA Notification 2026 primarily applies to Indian companies seeking to list their securities in permissible jurisdictions, particularly those looking to leverage the International Financial Services Centres (IFSCs). Specifically:
- Indian Companies: Any Indian company that intends to list its “equity instruments” (equity shares, convertible debentures, preference shares) in a permissible jurisdiction.
- Public Companies in IFSC Jurisdiction: Public companies operating within the International Financial Services Centres are now explicitly differentiated and can proceed with listings.
- Unlisted Public Companies in IFSC Jurisdiction: This is a crucial expansion. Unlisted public companies located in an IFSC jurisdiction are now eligible to list, provided they comply with the IFSCA Act, 2019, and its regulations. This opens a new avenue for these entities to access international capital. Compliance with IFSCA regulations is paramount for such entities, much like the requirements for AML/CFT and KYC guidelines.
- Companies with Negative Net Worth: Companies that previously might have been ineligible due to negative net worth can now list their equity instruments if they commit to allotting at least seventy-five percent of their net offer to qualified institutional buyers.
- Companies with Past Defaults: Companies with a history of defaulting on dues to banks or financial institutions must ensure such defaults have not persisted for “more than six months” and have been “made good” to be eligible.
- Practicing Professionals: Chartered Accountants, Cost Accountants, and Company Secretaries involved in certifying Form LEAP-1 for companies.
What Are the New Deadlines and Actionables?
The “Companies (Listing of equity instruments in permissible jurisdictions) Amendment Rules, 2026” came into force on the date of their publication in the Official Gazette, which was 04 November 2026. Therefore, these changes are effective immediately.
Practitioners must take note of the following actionables:
- Review Eligibility Criteria: Indian companies, especially unlisted public companies in IFSCs, must re-evaluate their eligibility for listing based on the expanded definition of “equity instruments” and the new provisions for IFSC-based entities.
- Assess Negative Net Worth Provisions: Companies with negative net worth planning a listing must understand the new condition of allotting at least seventy-five percent of the net offer to qualified institutional buyers. This requires strategic planning for investor outreach.
- Scrutinize Default History: Companies must rigorously check their default history with banks and financial institutions. Any default lasting “more than six months” that has not been “made good” will now impact eligibility, a tighter timeframe than before.
- Update Internal Procedures for Form LEAP-1: Companies and their professional advisors must update their internal processes for preparing and submitting Form LEAP-1. The new form requires specific details, including the Corporate Identity Number (CIN), and mandates attachments like the securities regulator/stock exchange approval, prospectus filing acknowledgment, and the prospectus itself.
- Ensure Compliance with IFSCA Act: Unlisted public companies in IFSC jurisdiction must ensure full compliance with the International Financial Services Centres Authority Act, 2019, and associated regulations to avail themselves of the new listing opportunities. This is a continuous compliance requirement.
- Educate Stakeholders: Compliance officers, CFOs, and company secretaries should inform their boards and management about these changes, particularly regarding the expanded instrument types and eligibility for IFSC-based companies.
What This Circular Does Not Cover
While the IFSCA Notification 2026 significantly broadens listing eligibility, it remains silent on several aspects:
- Specific Permissible Jurisdictions: The circular refers to “permissible jurisdictions” but does not explicitly list them. Companies must refer to the original Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024, or other relevant IFSCA guidelines for this information.
- Detailed Listing Procedures: The notification amends eligibility and defines instruments but does not provide a comprehensive guide on the step-by-step listing procedures, disclosure requirements beyond Form LEAP-1, or ongoing compliance obligations post-listing. These details would still be governed by the principal rules, other IFSCA regulations, and the rules of the specific permissible jurisdiction’s securities market regulator.
- Penalties for Non-Compliance: The circular does not specify any new penalties for non-compliance with these amended rules. However, it does draw attention to Sections 448 and 449 of the Companies Act, 2013, which provide for punishment for false statements or certifications and false evidence, respectively, in the context of Form LEAP-1.
- Capital Requirements: While it addresses companies with negative net worth, the circular does not introduce new general capital requirements or thresholds for listing, beyond the existing framework.
- Transition Period: Given that the rules are effective immediately upon publication, no specific transition period or grandfathering clauses for applications already in process are mentioned. Practitioners should assume immediate applicability.
The Algoy Perspective
The expansion to “equity instruments”—now including convertible debentures and preference shares—is a pragmatic move by the IFSCA. It offers Indian companies, particularly those within the IFSC ecosystem, far greater flexibility in how they structure their capital raises and access international markets. However, the real implementation challenge lies in the “qualified institutional buyers” (QIB) proviso for companies with negative net worth. Securing a minimum of seventy-five percent allotment from QIBs is a high bar, especially for nascent or growth-stage companies. While it opens the door, the onus is heavily on the issuer to demonstrate a compelling value proposition and robust institutional interest. This isn’t a silver bullet for troubled companies; it’s a pathway for those with strong backing and a clear institutional investment thesis. Practitioners should advise clients that the QIB commitment is a critical hurdle, demanding sophisticated investor relations and a credible growth story, not just regulatory compliance. This is a nuanced shift, requiring a deeper understanding of market dynamics alongside the regulatory text.
Frequently Asked Questions
What constitutes “equity instruments” under the amended rules?
As per the IFSCA Notification 2026, “equity instruments” now explicitly means “equity shares, convertible debentures, preference shares issued by an Indian Company.” This broadens the scope beyond just equity shares, allowing for more diverse capital structures to be listed.
Can unlisted public companies in IFSCs now list their securities?
Yes, the IFSCA Notification 2026 specifically inserts a new clause (c) in rule 3 of the principal rules, permitting “unlisted public companies in the International Financial Services Centres jurisdiction” to list, provided they comply with the IFSCA Act, 2019, and its regulations.
What are the new conditions for companies with negative net worth to list?
A company with negative net worth can now be eligible to issue its equity instruments for listing if it “undertakes to allot at least seventy-five per cent. of the net offer to qualified institutional buyers” in accordance with the regulations of the respective securities market regulator in the permissible jurisdiction.
How has the default period for eligibility changed?
The amended rule 5(e) states that for a company to be ineligible due to defaults on dues to banks or financial institutions, the default period has been reduced from “two years” to “more than six months.” Additionally, the clause now includes that “such default has not been made good,” emphasizing the need for rectification.
Sources and Further Reading
- The Companies (Listing of equity instruments in permissible jurisdictions) Amendment Rules, 2026
- International Financial Services Centres Authority (IFSCA)
- Search and track this circular on RegChat, Algoy’s regulatory chatbot
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