The International Financial Services Centres Authority (“IFSCA”), in exercise of the powers conferred under Section 12 and Section 13 of the International Financial Services Centres Authority Act, 2019 read with Regulation 146 of IFSCA (Fund Management) Regulations, 2025 (“FM Regulations 2025”), vide Circular No. F. No. IFSCA-IF-10PR/1/2023-Capital Markets/7,[1] dated April 08, 2025, issued the detailed guidance on the transition to the FM Regulations 2025, which came into effect following their publication in the official gazette on February 19, 2025 (“Circular”).
The FM Regulations 2025 repeal the previously issued IFSCA (Fund Management) Regulations, 2022 (“FM Regulation 2022”), introducing key modifications to the regulatory framework applicable to Fund Management Entities (“FMEs”) operating in International Financial Services Centres (“IFSCs”).
The key highlights of the Circular are as follows:
- One of the significant changes under the FM Regulations, 2025 is the extension of the validity period of the Private Placement Memorandum (“PPM”) for Venture Capital Schemes and Restricted Schemes from 6 (six) months to 12 (twelve) months. In addition, the minimum corpus requirement for these schemes has been reduced to USD 3 million (Three Million United States Dollars), down from the previous threshold of USD 5 million (Five Million United States Dollars).
- In terms of transitional provisions, the Circular clarifies that Venture Capital Schemes and Restricted Schemes filed under the FM Regulations 2022 can continue to launch under the new regulatory regime, provided the schemes were either taken on record by IFSCA in the 6 (six) month period ending on February 19, 2025, or had received approval for an extension of the PPM’s validity which extends beyond or ends on or after that date.
- IFSCA has also provided a 1 (one) time opportunity for FMEs to seek an extension for PPMs whose validity expired prior to February 19, 2025. To avail of this relief, FMEs must re-file such PPMs within 3 (three) months from the date of the Circular, without making material changes to critical scheme attributes such as its name, investment objective, structure, or type.
- However, changes necessary to comply with the FM Regulations, 2025 may be made. A filing fee equal to 50% (Fifty Percent) of the applicable fee for a fresh scheme under the FM Regulations is payable in such cases. Upon receipt and acceptance of the re-filed PPM, IFSCA shall provide an additional 6 (six) month validity from the date of communication.
- Finally, the Circular also clarifies that under Regulation 19(4) of the FM Regulations 2025 (for Venture Capital Schemes) and Regulation 31(4) of the FM Regulations 2025 (for Restricted Schemes), FMEs shall generally be required to notify IFSCA of any material changes to PPMs along with the applicable processing fee. However, where such changes are necessitated due to regulatory amendments or IFSCA’s own actions, the processing fee shall not be applicable.
[1]https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Ftransition-to-ifsca-fund-management-regulations-202508042025093121.pdf&Title=Transition%20to%20IFSCA%20%28Fund%20Management%29%20Regulations%2C%202025&Date=08%2F04%2F2025