Enhanced Investment Guidelines for Retail Funds in IFSC
CA Dishant Kothari
Managing Partner at VKND & Co. | Expert in Fund Setup, IPO Advisory, and Corporate Structuring in IFSC | Educating on Financial Strategies and Opportunities in Gift City"
𝗧𝗵𝗲 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 𝗖𝗲𝗻𝘁𝗿𝗲𝘀 𝗔𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝘆 (𝗜𝗙𝗦𝗖𝗔) implemented the Fund Management Regulations in 2022, establishing a clear regulatory framework for retail investment schemes within IFSCs (International Financial Services Centres). Building on these regulations, the Union Budget 2024-25 has introduced new clarifications aimed at streamlining investment limits and strengthening the framework for retail schemes operating in IFSCs.
𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗶𝗻 𝗨𝗻𝗹𝗶𝘀𝘁𝗲𝗱 𝗦𝗲𝗰𝘂𝗿𝗶𝘁𝗶𝗲𝘀: Retail schemes now have the flexibility to invest in specific unlisted securities issued by investment funds under designated conditions. Notably, when a retail scheme invests in an open-ended, unlisted fund that is both regulated and accessible to retail investors in its home country, certain investment restrictions will not apply.
𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆 𝗶𝗻 𝗙𝘂𝗻𝗱-𝗼𝗳-𝗙𝘂𝗻𝗱 (𝗙𝗢𝗙) 𝗦𝗰𝗵𝗲𝗺𝗲𝘀: For retail schemes structured as fund-of-funds, IFSCA now requires detailed disclosures in the offer document. This must include the specific funds they plan to invest in, as well as any affiliations between the fund management entity (FME) and the managers of those underlying funds, promoting greater transparency for investors.
𝗘𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲 𝗗𝗮𝘁𝗲: Enacted under the authority of the International Financial Services Centres Authority Act, 2019, these updates are effective immediately. This regulatory refinement supports the efficient operation of retail investment schemes in IFSCs, fostering a more accessible pathway for investors to engage in global opportunities through IFSC retail schemes.
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