IFSCA fund management rules: What changed
The International Financial Services Centres Authority (IFSCA) has introduced changes to its fund management framework for Fund Management Entities (FMEs), including mutual funds, portfolio management services and alternative investment funds. The source does not identify the notification or circular number or its effective date.
The changes allow FMEs and associates with Indian ultimate beneficial owners to contribute up to 25% of the corpus in certain overseas-focused schemes.
The earlier limit was 10% for venture capital schemes and Restricted Schemes investing exclusively in the International Financial Services Centre or foreign jurisdictions.
FMEs and their associates are exempt from minimum contribution requirements for certain Index Schemes, and for Fund of Funds schemes investing in Index Schemes or passive exchange-traded funds, subject to appropriate disclosures.
For Fund of Funds schemes, the automatic exemption applies only where there is no active fund management.
For close-ended Restricted Schemes, NAV computation and disclosure can move from semi-annual to annual if the FME obtains prior approval from investors representing at least 75% of the value of investments in the scheme.
Newsletter
The corridor, every morning.
Funding rounds and cross-border capital moves, one email, five minutes.
Some schemes will also not need an independent valuation of investments where the underlying schemes are independently valued. The change applies to venture capital schemes, Restricted Schemes and Retail Schemes in the circumstances described by IFSCA.
Retail Fund of Funds schemes investing in qualifying underlying schemes are exempt from existing sectoral concentration limits applicable to Retail Schemes. The source says this could give managers more flexibility when structuring international Fund of Funds products for retail investors through GIFT IFSC.
IFSCA has also expanded retail-investor disclosures to include the methodology used for NAV computation and conflicts of interest. The deadline for submitting scheme annual reports to the Authority and investors has been extended from four months to six months from the end of the financial year.
Who it affects: foreign investors and India Gulf corridor companies
For a foreign investor reviewing a fund product routed through GIFT IFSC, the relevant questions are whether the product is an Index Scheme, a passive Fund of Funds, a Retail Fund of Funds, a Restricted Scheme or a venture capital scheme. The source does not specify a separate treatment for foreign investors.
For an India Gulf corridor company considering an international Fund of Funds structure through GIFT IFSC, the sectoral-concentration exemption may be relevant where the underlying schemes are regulated by the relevant financial-sector regulator and permitted for retail investors in their home jurisdictions.
The source does not identify any Gulf jurisdiction or explain how home-jurisdiction eligibility should be assessed for a Gulf investor or fund.
More in Policy
