Schedule XI explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Paragraphs 3 to 6 and the Explanation of Schedule XI complete the Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme. They say which public Indian companies and existing shareholders are eligible, what the company must ensure, how voting rights are exercised and how the shares are priced, and they define eight terms. Paragraphs 1 and 2 and rule 34 are in the companion article.
This article is based on the Rules as notified on 17 October 2019 (S.O. 3732(E)) as amended by the notifications named in this article; the latest amendment consulted is S.O. 4870(E) dated 2 September 2026. Schedule XI is as inserted by S.O. 332(E), the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2024, of 24 January 2024; none of the later notifications to 2 September 2026 changes it. Amendments made after that date should be checked in the Gazette. There is no official consolidated text. If you are planning a listing, our legal consultation service can review the structure with you.
A public Indian company may issue shares, and existing shareholders may offer shares, on an International Exchange only if the company, promoters, directors and selling shareholders are not debarred from the capital market, not wilful defaulters, not fugitive economic offenders and the company is not under inspection or investigation under the Companies Act, 2013 (paragraph 3). Foreign shares plus shares already held by non-residents may not exceed the foreign holding limit in Schedule I (paragraph 4). Voting rights are exercised by the permissible holder directly or through a custodian on that holder's instruction (paragraph 5). An initial listing by an unlisted public company is priced by book-building, not below fair market value (paragraph 6).
Paragraph 3: eligibility
Public Indian company issuing shares: paragraph 3(1)(i)
A public Indian company may issue equity shares in a permissible jurisdiction if:
- (a) the company, any of its promoters, promoter group, directors or selling shareholders are not debarred from accessing the capital market by the appropriate regulator;
- (b) none of the promoters or directors is a promoter or director of any other Indian company which is debarred from accessing the capital market by the appropriate regulator;
- (c) the company or any of its promoters or directors is not a wilful defaulter;
- (d) the company is not under inspection or investigation under the Companies Act, 2013;
- (e) none of its promoters or directors is a fugitive economic offender.
Existing holders offering shares: paragraph 3(1)(ii)
Existing holders of the public Indian company are eligible to offer shares if:
- (a) the company or the holder offering equity shares is not debarred from accessing the capital market by the appropriate regulator;
- (b) none of the promoters or directors is a promoter or director of any other Indian company, listed or otherwise, which is debarred from accessing the capital market by the appropriate regulator;
- (c) the company or the holder offering is not a wilful defaulter;
- (d) the company is not under inspection or investigation under the Companies Act, 2013;
- (e) none of the promoters or directors of the company or the holder offering is a fugitive economic offender.
Listed and unlisted companies: paragraph 3(2) and (3)
- 3(2): a listed Indian company may issue equity shares on an International Exchange, or its existing shareholders may offer equity shares, subject to compliance with the conditions and other requirements as per the norms notified by the Securities and Exchange Board of India from time to time.
- 3(3): a public unlisted Indian company may do so subject to compliance with the conditions and other requirements as per the norms notified by the Ministry of Corporate Affairs from time to time.
The SEBI and Ministry norms are not in the texts consulted and are not described here.
Explanation on past debarment
The Explanation at the end of paragraph 3 says the restrictions at items (a) and (b) of the eligibility lists above shall not apply to persons or entities mentioned there who were debarred in the past by the Government or the appropriate regulator and whose period of debarment is already over as on the date of listing of the equity shares on the International Exchange or Exchanges. The cross-references in the printed Explanation are worded in a clumsy way ("items (a) and (b) of sub-clause (i) of clauses (I) and (II) of sub-paragraph (1) of paragraph 3 and ..."); the reading here follows the evident sense, and the reader should confirm against the official text.
Paragraph 4: obligations of companies
4(1). The public Indian company shall ensure compliance with extant laws relating to issuance of equity shares, including the requirements in the Scheme, the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, the Depositories Act, 1996, the Foreign Exchange Management Act, 1999, the Prevention of Money-laundering Act, 2002 or the Companies Act, 2013 and rules and regulations under them, as applicable. For this purpose the company may also enter into necessary arrangements with an Indian Depository and a Foreign Depository.
4(2). The company shall ensure that the aggregate of equity shares which may be issued or offered in a permissible jurisdiction, along with equity shares already held in India by persons resident outside India, shall not exceed the limit on foreign holding under Schedule I.
The foreign holding limit for a sector is in the Table of Schedule I; see our articles on Schedule I paragraph 3 and FDI, foreign portfolio investment and the sectoral cap.
Paragraph 5: voting rights
Public Indian companies having their equity shares listed on an International Exchange shall ensure that the voting rights on such equity shares are exercised directly by the permissible holder or through their custodian pursuant to voting instruction only from such permissible holder.
Paragraph 6: pricing
6(1). Where equity shares are issued by a listed company, or offered by existing shareholders of equity shares listed on a recognised stock exchange in India, they shall be issued at a price not less than the price applicable to a corresponding mode of issuance of such equity shares to domestic investors under the applicable laws.
6(2). In case of initial listing of equity shares by a public unlisted Indian company on the International Exchange, the price of issue or transfer shall be determined by a book-building process as permitted by that Exchange and shall not be less than the fair market value under applicable rules or regulations under the FEMA.
Proviso: subsequent issuance or transfer of shares for the purpose of listing additional shares after initial listing would be based on applicable pricing norms of the International Exchange and the permissible jurisdiction.
The ordinary pricing rules under rule 21 are in our articles on pricing of shares issued to non-residents and pricing of share transfers and swaps. The Rules do not say what "fair market value under applicable rules" means for this scheme beyond that phrase.
The Explanation: eight defined terms
| Clause | Term | Meaning as printed |
|---|---|---|
| (a) | Appropriate regulator | Any financial sector regulator or Government Ministry or Department administering Acts applicable to the company, listed or unlisted |
| (b) | Beneficial owner | As in the proviso to sub-rule (1) of rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 |
| (c) | Foreign depository | A corporate entity registered and regulated in a permissible jurisdiction for holding securities and maintaining securities accounts for beneficial owners in an electronic manner, and managing rights or interests in securities resulting from the credit of securities to a securities account; includes Central Securities Depositories and International Central Securities Depositories |
| (d) | Fugitive economic offender | As in clause (f) of sub-section (1) of section 2 of the Fugitive Economic Offenders Act, 2018 |
| (e) | Indian depository | A depository as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 |
| (f) | Offer by existing holders of equity shares | Offer of existing equity shares pursuant to a formal agreement among the company, the Indian Depository and the Foreign Depository |
| (g) | Offer document | A prospectus, red herring prospectus or shelf prospectus, as applicable, referred to in clause (70) of section 2 of the Companies Act, 2013, in a public issue, and a letter of offer in a rights issue |
| (h) | Wilful defaulter | A person categorised as a wilful defaulter by any bank or financial institution or consortium thereof, under the Reserve Bank's guidelines on wilful defaulters |
The Reserve Bank's Master Direction - Foreign Investment in India, updated up to June 15, 2026, restates in Annex 11 only the permissible holder and payment points; it does not repeat paragraphs 3 to 6.
A worked example
Lakshya Components Limited is a public unlisted Indian company planning a first listing on an International Exchange. Before it proceeds, it checks that neither it nor its promoters or directors are debarred by an appropriate regulator, that none is a wilful defaulter or fugitive economic offender, and that it is not under inspection or investigation under the Companies Act. It confirms that the shares to be issued, with existing non-resident holdings, stay within the Schedule I foreign holding limit. It prices the issue by book-building, at not less than fair market value under the applicable FEMA rules. After listing, voting by foreign holders goes through the permissible holder or its custodian on that holder's instruction only. If a promoter was debarred in the past but the debarment is over on the date of listing, the Explanation lets the company proceed.
Need help with a direct listing plan?
Eligibility screens, the Schedule I limit and the pricing floor need to be tested together, and in good time. Our legal consultation team can organise that review with you and your other advisers.
Key takeaways
- Eligibility turns on no debarment, no wilful default, no fugitive economic offender status and no Companies Act inspection or investigation; past debarment that has ended is excused.
- Listed companies follow SEBI norms and public unlisted companies follow Ministry of Corporate Affairs norms, as notified from time to time.
- Overseas issue plus existing non-resident holdings cannot exceed the Schedule I foreign holding limit.
- Voting is exercised by the permissible holder directly or through a custodian on its instruction only.
- An initial listing is priced by book-building at not less than fair market value.
Read next
- Rule 34 and Schedule XI to the FEM (Non-debt Instruments) Rules, 2019: direct listing on international exchanges
- Schedule I paragraph 3 of the FEM (Non-debt Instruments) Rules, 2019: sectoral caps, investing companies and joint audit
- Rule 21 of the FEM (Non-debt Instruments) Rules, 2019: pricing of shares issued to non-residents
- Section 42 of the Companies Act, 2013: private placement of securities
Disclaimer: Based on the Gazette text of the instrument this article names, as notified and as amended by the notifications named in the article (for the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 the latest amendment consulted is S.O. 4870(E) dated 2 September 2026), as consulted on 2 October 2026. There is no official consolidated text; the provisions were read with each amendment applied. Sectoral caps, entry routes, conditions, forms and time limits change by notification, press note and circular; later changes should be checked on the Gazette, DPIIT and Reserve Bank sites. This article is general information, not legal advice; check the official text before acting.