The International Financial Services Centers Authority (IFSCA) has introduced the IFSCA (Fund Management) Regulations, 2025, officially notified on February 19, 2025. These regulations supersede the previous 2020 version, aiming to enhance the ease of doing business, reduce compliance costs, and provide greater regulatory clarity within the GIFT IFSC.
Key Reforms in the 2025 Regulations:
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Non-Retail Schemes (Venture capital Schemes and Restricted Schemes):
- Minimum Corpus Reduction: The required minimum corpus for non-retail schemes has been lowered from USD 5 million to USD 3 million, facilitating easier initiation of investment activities.
- Extended PPM Validity: The validity period for a scheme's Private Placement Memorandum (PPM) has been extended to 12 months, providing fund managers with more time to raise the necessary corpus.
Further, owing to their unique nature, open-ended schemes have been permitted to commence the investment activities upon achieving an investment of USD 1 Mn, and the minimum corpus of USD 3 Mn shall be achieved within 12 months period.
- FME Contribution Flexibility: Fund Management Entities (FMEs) and their associates are now permitted to contribute up to 100% to a scheme, an increase from the previous 10% cap, subject to specific conditions.
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Streamlined Manpower Requirements:
- KMP Appointment Process: The necessity for prior IFSCA approval when appointing Key Managerial Personnel (KMPs) has been removed. FMEs are now only required to inform the IFSCA of such appointments, simplifying administrative procedures.
- Additional KMPs for Large AUMs: FMEs managing assets under management (AUM) exceeding USD 1 billion are now required to appoint an additional KMP to ensure robust oversight.
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Enhancements for Retail Schemes:
- Revised Experience Criteria: The experience requirements for FMEs applying to manage retail schemes have been broadened to consider the collective experience of holding companies and subsidiaries, offering a more comprehensive assessment of an entity's qualifications.
- Reduced Minimum Corpus: Aligning with non-retail schemes, the minimum corpus for retail schemes has been decreased to USD 3 million, with open-ended schemes allowed to commence investments upon reaching a USD 1 million corpus.
- Portfolio Management Services: To further boost PMS activities and in line with the provisions in other jurisdictions, the minimum investment amount has been reduced to USD 75,000 from USD 150,000.
- Clarity has been provided with respect to the appointment of a custodian in IFSC. Further, an adequate window of 12 months has been provided to FMEs to comply with this requirement.
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Additional Notable Changes:
- Custodian Appointment Clarification: Schemes that require a custodian must now appoint one registered with the IFSCA, ensuring enhanced oversight and asset security.
These comprehensive updates are designed to position the GIFT IFSC as a more attractive and competitive hub for global fund management activities, as reflected in the IFSC Fund Management Regulation, 2025, which reflects IFSCA's commitment to fostering a dynamic and investor-friendly financial ecosystem.
FAQs – IFSC Fund Management Regulation, 2025 (CORPZO)
Q1. What is the IFSC Fund Management Regulation, 2025?
Answer: IFSC Fund Management Regulation, 2025 provides a regulatory framework for registration, operation, and compliance of fund management entities in GIFT IFSC.
Q2. Who is required to comply with the IFSC Fund Management Regulation, 2025?
Answer: Fund managers, asset management companies, and investment managers operating or proposing to operate in IFSC must comply.
Q3. Which authority regulates fund management in IFSC?
Answer: Fund management activities in IFSC are regulated by the International Financial Services Centres Authority (IFSCA).
Q4. What types of funds are covered under the IFSC Fund Management Regulation, 2025?
Answer: The regulation covers Alternative Investment Funds (AIFs), Mutual Funds, Venture Capital Funds, and other specified investment vehicles.
Q5. What is the registration process under the IFSC Fund Management Regulation, 2025?
Answer: The process includes entity incorporation in IFSC, application to IFSCA, submission of compliance documents, and regulatory approval.
Q6. What are the key compliance requirements for IFSC fund managers?
Answer: Key requirements include capital adequacy, governance norms, periodic reporting, audit compliance, and risk management frameworks.
Q7. Are foreign fund managers allowed under the IFSC Fund Management Regulation, 2025?
Answer: Yes, foreign fund managers can operate in IFSC, subject to IFSCA eligibility, fit-and-proper criteria, and compliance norms.
Q8. What documents are required for IFSC fund management registration?
Answer: Documents include incorporation details, business plan, fund structure, key management profiles, compliance policies, and financial projections.
Q9. What are the penalties for non-compliance with IFSC regulations?
Answer: Non-compliance may result in monetary penalties, suspension or cancellation of registration, and regulatory enforcement actions by IFSCA.
Q10. How does CORPZO assist with IFSC Fund Management Regulation compliance?
Answer: CORPZO provides end-to-end support, including advisory, registration, documentation, regulatory filings, and ongoing compliance management.