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- IFSCA widens the green channel for launch of schemes in GIFT City
The International Financial Services Centre Authority (“IFSCA”) vide a circular dated April 5, 2024, on “Ease of doing business – Filing of Schemes or funds under IFSCA (Fund Management) Regulations 2022” (“IFSCA Circular”), has simplified the process for launching of funds and schemes under the IFSCA (Fund Management) Regulations 2022 (“FM Regulations”). The newly simplified process provided for by the IFSCA circular applies to all schemes under the FM Regulations except Retail Schemes.
As per the IFSCA Circular, henceforth, Fund Management Entities (FMEs) can launch any scheme, other than a retail scheme, as soon the PPM along with the scheme application form (with all relevant documents attached) is filed with the IFSCA. The IFSCA Circular has listed out certain minimum disclosures required in the PPM of the scheme being launched. Additionally, when filing scheme documents with the IFSCA, FMEs are required to provide a declaration to the effect that all relevant disclosures, material to the Scheme or Fund, have been disclosed in the PPM.
Prior to this, in the case of Restricted Schemes, Regulation 31(2) of the FM Regulations required FMEs to wait for IFSCA’s comments (if any) and ensure that these comments were incorporated in the PPM before proceeding with the launch. The ‘green channel’ route whereby FMEs were permitted to launch schemes immediately on filing of the PPM was available only to ‘Venture Capital Schemes’ and Restricted Schemes that solicited money only from accredited investors.
We compared the minimum disclosures required in the PPM as per the IFSCA Circular with the requirements prescribed by SEBI for PPMs vide its circular dated February 5, 2020 (“SEBI PPM Template”), which introduced two standardized templates for the PPMs, one for of Category I and Category II AIFs and another for Category III AIFs. The minimum disclosure requirements in the SEBI PPM Template which are not included in the IFSCA Circular are:
– Excuse and Exclusion
– Defaulting Unitholders
– Hurdle Rate of Return
– Mandatory Exit of Investors
– Key Person & Key Person Event
– Listing
– Auditors
We did not find any item in the IFSCA Circular which isn’t to be found in the SEBI PPM Template.
The IFSCA Circular also provides an updated scheme application form[1], in which the following changes have been made:
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We hope you have found this information useful. For any queries/clarifications please write to us at insights@elp-in.com or write to our authors:
Vinod Joseph, Partner – Email – vinodjoseph@elp-in.com
Paridhi Jain, Associate, Email – paridhijain@elp-in.com
References:
[1] Until now, the IFSCA’s application form was available at
[2] Contained in para 3.4 of the old form
[3] USD 75,000 for of the FME of a VCS and USD 5,00,000 for the FME of a restricted scheme
[4] The FME or its associate shall invest (a) at least 2.5% of the targeted corpus and not exceeding 10% of the targeted corpus in a scheme with targeted corpus of less than USD 30 Million; or (b) at least USD 750,000 and not exceeding 10% of the targeted corpus in a scheme with targeted corpus of more than USD 30 Million.
Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice. This document is not intended to address the circumstances of any individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.