Direct Listing Plan Needs Clear Investor Compensation Remedy

A direct listing lets a company put its existing shares on a stock exchange without selling new shares to raise money.

This can help companies gain a market value and give early investors a way to sell their shares.

The proposed rules from IFSCA include checks intended to protect investors.

However, they do not clearly explain how investors can recover money if the company gives false or misleading information.

Existing Indian law mainly deals with people who buy securities directly through a prospectus.

That may not cover someone who buys an existing share from another investor.

The author says the rules should create a clear right to compensation.

The remedy should cover early buyers and people responsible for the information.

Clear limits on who can claim, when they can claim and who is liable could protect investors without discouraging listings.