The International Financial Services Centres Authority (IFSCA) has released a set of proposed amendments to the Fund Management Regulations, 2022, aimed at simplifying fund operations, enhancing investor protection, and aligning GIFT City’s regulatory framework with global standards.
These changes reflect IFSCA’s commitment to building a globally competitive fund management hub and are open for public comment until 6 November 2025.
Key Proposed Amendments
Simplified Eligibility for Key Management Personnel (KMPs)
- Reduced experience requirements
- Option to offset experience with global professional certifications
Flexible Validity of Placement Memorandum (PPM)
- FMEs may extend PPM validity multiple times
- Designed to support fundraising flexibility
Simplified Fund Operations
- NAV and portfolio disclosures to begin from the financial year or quarter of first close
- Option to reduce disclosure frequency, subject to investor approval
Skin-in-the-Game Flexibility
- Broader exemptions from mandatory FME co-investment
- Applies to schemes with limited discretion
Extended Timelines
- Annual report submission extended from 4 to 6 months
- Custodian appointment window extended from 12 to 24 months
Tighter Investment Norms
- Venture Capital Schemes may reinvest in later rounds to avoid dilution (within limits)
- Restrictions on fund usage before achieving minimum corpus (only low-risk, liquid instruments allowed)
- Open-ended schemes can invest in unlisted securities only after reaching minimum corpus
Investor Rights & Governance
- Pari-passu treatment of investors in distributions, with limited exceptions
- Fiduciaries must formally appoint internal compliance and risk policies
- Clearer disclosure timelines and NAV computation rules
- NAV must be tied to portfolio valuation by independent service providers
Custodian Responsibilities
- Temporary use of regulated custodians outside IFSC permitted while local capacity develops
New Co-Investment & Third-Party Management Frameworks
- Introduction of Special Purpose Vehicles (SPVs) to expand fund structuring options
Refined ESG Reporting
- ESG thresholds refined to exclude Fund of Funds
- Aligned with international proportionality standards
- Principle-based sustainability and governance disclosures modelled on SFDR and TCFD
Strategic Objectives of the Amendments
- Simplify regulatory compliance for Fund Management Entities (FMEs)
- Strengthen investor protection through defined safeguards
- Align IFSC regulations with global fund management standards and SEBI norms
- Reinforce GIFT City IFSC as a globally competitive fund management hub
Access the full proposal: IFSCA Consultation Paper – October 2025
Public comments are invited until 6 November 2025
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