Fund Management Entity in GIFT IFSC: Registration Under the 2025 Regulations

In most jurisdictions, a fund manager’s licence and its funds’ authorisations are separate exercises. GIFT IFSC follows that model, and the first exercise, registration as a Fund Management Entity (FME), determines what the manager may do afterwards. The category chosen at registration decides which schemes may be launched, which investors may be approached, what capital must be maintained and how many people must sit in Gandhinagar.

Three Categories, One Hierarchy

Regulation 3 of the IFSCA (Fund Management) Regulations, 2025 requires any entity intending to carry on fund management in an IFSC to hold a certificate of registration in one of three categories.

Authorised FME. For managers that pool money from accredited investors, or investors investing above a specified threshold, by private placement and invest in start-ups or early-stage ventures through a Venture Capital Scheme; and for FMEs set up by a single family to manage its Family Investment Fund (Article 20).

Registered FME (Non-Retail). For managers that pool money from accredited investors or investors above the specified threshold by private placement, for investment through one or more restricted schemes. Such an FME may also provide Portfolio Management Services, including for a multi-family office, and act as investment manager for private placement of Investment Trusts (REITs and InvITs). It may additionally do everything an Authorised FME may do.

Registered FME (Retail). For managers that pool money from all investors, or a section of investors, through retail schemes. Such an FME may act as investment manager for a public offer of Investment Trusts and may launch Exchange Traded Funds, and may also do everything permitted to the other two categories.

The structure is cumulative: each higher category carries the permissions of those below it. Category changes after registration require IFSCA’s prior approval.

Legal Form

An FME’s legal structure in GIFT IFSC may be a company, an LLP, a branch of either, or another permitted form, subject to two restrictions:

• a Registered FME (Retail) may not be an LLP or a branch; and
• the branch structure is available only to an FME already registered or regulated by a financial sector regulator in India or a foreign jurisdiction for similar activities.

A branch must be adequately ring-fenced by the parent, and the parent must maintain the specified minimum capital, earmarked at all times for the IFSC branch, which may be held in the parent’s jurisdiction.

The constitutional documents, the memorandum of association or the LLP agreement, must permit fund management. A Registered FME (Retail) must have at least four directors, of whom at least half must be independent and not associated with the FME.

Track Record

For a Registered FME (Retail), Regulation 6 prescribes an objective sound track record requirement as part of the FME eligibility criteria:

• the FME, its holding company or their subsidiaries have at least five years of experience collectively managing assets of at least USD 200 million with more than 25,000 investors; or
• persons in control of the FME holding at least 25% of its shareholding have carried on fund management related activities, including portfolio management, wealth management, distribution of financial products and investment advisory, for at least five years, collectively for at least 1,000 investors on assets of at least USD 50 million, and the FME has a net worth of at least USD 2 million.

IFSCA may specify other criteria to facilitate new-generation fintech companies with innovative ideas. For the other two categories, the requirement is framed in terms of employees having the relevant experience specified in the regulations.

People: The Principal Officer and KMPs

Every applicant must designate a principal officer responsible for the FME’s overall activities, including fund management, risk management and compliance.

A Registered FME must additionally designate a compliance officer to meet the applicable FME compliance officer requirements. A Registered FME (Retail) must appoint a further KMP responsible for fund management before filing the offer document for its first retail scheme or ETF. Any FME managing AUM of at least USD 1 billion (excluding fund-of-funds AUM) at the close of a financial year must appoint an additional fund-management KMP within six months of the year end; continuation becomes optional if AUM stays below USD 1 billion for two subsequent consecutive financial years with a reasonable expectation that it will not rise, and the requirement may not apply to FMEs set up by governments and government-related investors that are sole contributors to the schemes.

All of these personnel must be based out of the IFSC. The qualification and experience conditions were substituted with effect from 30 January 2026 and now require a professional qualification or a relevant post-graduate degree or diploma (with a graduate degree sufficing for a principal officer with fifteen years’ relevant experience), plus at least five years’ experience in related activities in the securities market or financial products in an “eligible institution”, with shorter periods for a compliance officer with a professional qualification and for individuals holding specified certifications.

The definition of “eligible institution” is broad: market infrastructure institutions, capital market intermediaries, financial sector regulators, FMEs, banks, finance companies, insurers and insurance intermediaries in the IFSC and equivalent institutions elsewhere; consulting, advisory and professional firms serving those institutions in relation to a financial product; and the finance, accounts, secretarial or legal departments of a company.

One substantive operating condition sits in this chapter rather than in the scheme chapters: the proposal on portfolio composition of a fund must be initiated by a person based in the FME’s IFSC office. Substance is built into the rule.

Net Worth

The Second Schedule prescribes the minimum net worth requirements for FMEs, which must be maintained at all times:

A branch may maintain the requirement at parent level, and the parent must ensure adequate funds for day-to-day operations. These requirements are separate from, and additional to, net worth requirements for other activities inside or outside the IFSC.

Fit and Proper, and Infrastructure

The applicant, its principal officer, directors, designated partners, KMPs and controlling shareholders must satisfy the fit-and-proper criteria for FMEs at all times. Regulation 9 sets out a record of fairness and integrity, and a list of disqualifications including conviction for offences involving moral turpitude, economic offences or securities-law offences; a pending charge sheet filed by an Indian enforcement agency in an economic-offence matter; framed charges; pending recovery proceedings by a financial regulatory authority; winding up for malfeasance; undischarged insolvency; a subsisting debarment order; another order with a material bearing on the securities market within the last three years; unsoundness of mind; wilful default; and fugitive-economic-offender status.

The FME must have office space, equipment, communication facilities and manpower commensurate with its operations, and the office must be dedicated, secured and accessible only to authorised persons.

FME Registration Process in GIFT IFSC

The Fund Management Entity registration process in GIFT IFSC involves submitting an application to IFSCA, meeting the eligibility requirements and obtaining approval under the appropriate category. Applicants must also comply with the applicable regulatory requirements before launching a fund scheme.

1. File the application in the manner specified in the First Schedule, with declarations, undertakings, documents and fees. An incomplete application is liable to be rejected.
2. Respond to IFSCA’s requests for further information; attend a personal representation if required; and permit an inspection of the office before grant, if IFSCA undertakes one.
3. On satisfaction, IFSCA grants the certificate under the appropriate category, against payment of the registration fee.
4. If registration cannot be granted, IFSCA communicates the deficiencies and allows thirty days to rectify them, and may refuse with reasons if they are not cured.
5. The certificate remains valid for such period as IFSCA specifies, unless suspended, cancelled or surrendered. Voluntary surrender takes effect only on acceptance by IFSCA.

Before filing a scheme document, the FME must appoint fiduciaries appropriate to the scheme’s form, being directors for a company, designated partners for an LLP or trustees for a trust, all of whom must be fit and proper. For retail schemes, appointment of a fiduciary requires IFSCA’s prior approval.

Frequently Asked Questions

1. What are the three categories of Fund Management Entities (FMEs) in GIFT IFSC?

The IFSCA (Fund Management) Regulations, 2025 recognise Authorised FME, Registered FME (Non-Retail) and Registered FME (Retail), each with different permissions.

2. What is the minimum net worth required for an FME in GIFT IFSC?

The minimum net worth is USD 75,000 for an Authorised FME, USD 500,000 for a Registered FME (Non-Retail) and USD 1 million for a Registered FME (Retail).

3. Can an FME operate as an LLP or a branch in GIFT IFSC?

Yes, subject to regulatory conditions. However, a Registered FME (Retail) cannot operate as an LLP or a branch, and branch structures are restricted to eligible entities already regulated for similar activities.

4. What qualifications must an FME’s principal officer possess?

The principal officer must meet the prescribed educational and experience requirements under the regulations, including relevant professional qualifications or postgraduate education and experience in financial products or securities-market activities.

5. Must an FME’s key personnel be based in GIFT IFSC?

Yes. The principal officer and other designated key personnel covered by the regulations must be based in the IFSC.

6. What is the registration process for an FME in GIFT IFSC?

The applicant must submit the prescribed application, documents, declarations and fees to IFSCA, respond to any requests for information and satisfy the applicable eligibility and infrastructure requirements before registration is granted.

7. Can an FME change its registration category after approval?

Yes. An FME may change its category, but it must obtain IFSCA’s prior approval