LSE relaxes norms for Indian firms

London Stock Exchange is wooing Indian companies by relaxing the new accounting norms, which have been introduced recently by the European Union.

The requirement for listed companies to report financial data in accordance with the International Financial Reporting Standards came into effect from July 1.

However, following the implementation of IFRS, the LSE has introduced a new and more flexible market for Indian and other third country issuers of special securities, including depository receipts, convertible bonds and debt.

This exemption from EU securities regulation will be available to Indian companies on an indefinite basis, LSE officials currently in India said.

By introducing the exemption, the LSE and the UK Listing Authority have ensured continuity for Indian GDR and foreign currency convertible bond issuers. As before, Indian issuers can raise capital from London's professional investors, yet adhere to the acounting standard of their choice.

Those Indian issuers who choose to report their financial information according to IFRS, instead of Indian accounting standards, will have the added benefit of marketing their issue to retail investors.

LSE's director (Market Services) Martin Graham said, ''The professional securities market route retains the flexibility that has been the feature of London's approach to issuers from emerging markets. It gives Indian issuers another route to raise capital in London and gain access to one of the world's largest pools of international capital.''

LSE Head of Business Development for India, Hugh Sandeman said, ''All European stock exchanges are now under the same regulations and disclosure standards. Today the differentiating factors between exchanges are profile and trading."

"In both counts, London is the European leader by far. Even if an Indian company chooses to list in another jurisdiction, it can admit its GDRs to trading on the International Order Book (IOB) and benefit from the ensuing liquidity, he added.''

There are currently 20 Indian companies with GDRs listed on the London Stock Exchange's main market.

By the end of 2004, the market capitalisation of UK and international companies on the LSE's markets amounted to pound 3.5 trillion with pound 4.7 trillion of equity business transacted over the year.