The tightening of stock exchange laws in the European Union may affect Indian companies going for overseas listing of their equity and debt issues, as they have to mandatorily stick to one country for all future fund raising activities.

While harmonising its capital market laws, EU has tightened norms for listing of equity or debt by companies based outside Europe through two provisions -- prospectus and transparency directives.

"According to the new prospectus directive, once a company applies in one country, it has to stick to that for all future listings of debt and equity. So you get tied to one country," London Stock Exchange business development manager for India, James Woodley, told PTI in New Delhi.

This means that it will be difficult for companies listed in smaller European bourses like Luxemburg to raise funds from bigger exchanges like LSE in the future.

Although the new directive came into effect from December last year, not many companies listed in the EU are aware of the consequences.

Moreover, Woodley said the new transparency directive may make it mandatory for companies to report their accounts according to the International Financial Reporting Standards or the US GAAP.

"These directives could affect companies in raising capital in future, diversifying products, investor protection and other aspects," Woodley said.

The move assumes significance for as many as 18 Indian companies whose GDRs are listed in either LSE or Luxemburg exchange, along with many others seeking to raise funds through external commercial borrowing or foreign currency convertible bonds in the coming months.