The International Financial Services Centres Authority (IFSCA) has introduced a new Stewardship Code for Fund Managers and Institutional Investors operating within GIFT City IFSC. This forward-looking framework aligns with global best practices and aims to promote responsible investment, transparency, and long-term value creation.
The Code outlines seven core principles that Fund Management Entities (FMEs) must adopt and implement.
The 7 Principles of the IFSCA Stewardship Code
1. Stewardship Policy
FMEs must establish a publicly available stewardship policy that outlines their investment philosophy, governance approach, and oversight mechanisms.
2. Monitoring
Investors are expected to actively monitor portfolio companies, assessing business models, financial performance, ESG issues, and governance practices.
3. Active Engagement
Constructive engagement with portfolio companies is encouraged. Investors should escalate concerns when necessary and maintain transparent documentation of their actions.
4. Managing Conflicts of Interest
FMEs must implement robust frameworks to identify, mitigate, and disclose conflicts of interest, always acting in the best interest of clients and beneficiaries.
5. Responsible Voting Policy
A structured voting policy must be in place to ensure decisions are transparent, aligned with long-term goals, and go beyond rubber-stamping management proposals.
6. Collaboration
Investors are encouraged to collaborate with peers to enhance governance standards and promote sustainable value creation.
7. Disclosure and Reporting
FMEs must publish annual reports detailing their stewardship activities, outcomes, and any deviations from their stated policies.
What the Code Leaves Open
While the Code sets a strong foundation, it also provides flexibility in implementation:
No Fixed ESG Format or Timeline
- Principle 7 allows FMEs to report in an “easy-to-read format” and “periodically,” enabling alignment with home jurisdiction standards.
Expected ESG Content, Not Prescriptive
- Principles 2, 3, and 7 outline general ESG monitoring and engagement expectations, but do not mandate specific data points.
No Mandated Framework
- FMEs may adopt stewardship frameworks from their home regulators, domestic or international, so long as they reflect the core principles of the IFSCA Code.
Source: International Financial Services Centres Authority
What’s Next?
Future IFSCA guidance may introduce:
- Evaluation matrices
- Best practice rankings
- Enforcement mechanisms
These would help standardise stewardship practices and further align GIFT City with global governance norms.
How Galaxy by Funds-Axis Supports Stewardship & ESG
At Funds-Axis, our Galaxy platform is designed to help FMEs meet evolving stewardship and ESG expectations with confidence. Galaxy enables:
- ESG monitoring and engagement tracking
- Customisable stewardship reporting templates
- Conflict of interest management tools
- Voting policy documentation and audit trails
