The International Financial Services Centres Authority (IFSCA) has issued a significant circular on September 18, 2025, aimed at clarifying the regulatory treatment of convertible debt securities, particularly those in the form of foreign currency convertible bonds (FCCBs), for listing on recognised stock exchanges in International Financial Services Centres (IFSCs).
This clarification responds to multiple stakeholder queries regarding the procedural and regulatory expectations under the IFSCA (Listing) Regulations, 2024, which govern the listing of a broad category of financial instruments including specified securities, debt securities, and depository receipts.
What Does the Circular Say?
The circular clearly states that:
Convertible debt securities such as FCCBs shall be subject to the same procedure, manner, and conditions applicable to regular debt securities, until their conversion, for the purpose of listing on IFSC stock exchanges.
This effectively means that until the bonds convert into equity, they will be treated in line with other debt securities under the Listing Regulations. This provides a much-needed roadmap for issuers and investors seeking to access global capital through IFSC platforms.
Key Takeaways from the Circular:
Mutatis Mutandis Application: The procedures for debt securities under the 2024 Listing Regulations will apply “mutatis mutandis” (i.e., with necessary adjustments) to convertible debt securities like FCCBs until they are converted into equity.
Disclosure Requirements: The offer document or information memorandum must prominently disclose the listing status of the equity shares that will be issued upon conversion. This ensures transparency for investors.
Immediate Applicability: The circular is applicable with immediate effect and covers both existing and upcoming issuances of such convertible instruments in the IFSC framework.
Legal Backing: The circular is issued under the powers granted to IFSCA by Sections 12 and 13 of the IFSCA Act, 2019, and Regulation 130(3) of the Listing Regulations.
Implications for Market Participants
This clarification is expected to:
- Simplify listing procedures for issuers looking to raise foreign currency-denominated funds through convertible instruments.
- Enhance regulatory certainty for global investors and market intermediaries operating in the IFSC ecosystem.
- Promote deeper debt markets within the IFSCs by offering a broader array of instruments that are easier to list and trade.
- Support the positioning of GIFT City IFSC as a competitive global financial centre by aligning regulatory practices with international norms.