TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Fund Management) (Second Amendment) Regulations, 2026.
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....shall come into force on the date^# of their publication in the Official Gazette. 2. In regulation 2 of the principal regulations, in sub-regulation (1), for clause (d), the following clause shall be substituted, namely: - "(d) "associate" means- (i) a person, in which a director or partner or trustee of the FME or the FME or any fiduciaries as appointed in terms of sub-regulation (2) of regulation 17 of these Regulations, either individually or collectively, holds twenty per cent. (20%) or more of the paid-up equity share capital or partnership interest or such other equivalent direct economic interest, by whatever name called, as the case may be; (ii) a person, either individually or collectively, holds twenty per cent. (20%) or more of the paid-up equity share capital or partnership interest or such other equivalent direct economic interest, by whatever name called, as the case may be, in the FME; or (iii) any other person, in which the person referred to in sub-clause (ii) holds twenty per cent. (20%) or more of the paid-up equity share capital or partnership interest or such other equivalent direct economic interest, by whatever name call....
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.... interest (on a fully diluted basis) of the scheme in such Investee Company does not exceed its pre-issue beneficial interest (on a fully diluted basis) therein." 6. In regulation 23 of the principal regulations, after sub-regulation (4), the following sub-regulation shall be inserted, namely: - "(5) The FME shall ensure that any differential distribution rights to investors through issuance of senior and junior or subordinate units in a Venture Capital scheme shall be in accordance with the framework as may be specified by the Authority. Explanation. - "senior units" indicate such class of units which has superior rights over the distribution proceeds of the Venture Capital scheme, while "junior units" or "subordinate units" indicate such classes of units, including mezzanine units, the rights of which over the distribution proceeds of the scheme would be inferior to that of senior units." 7. In regulation 24 of the principal regulations, for the sub-regulations (2) and (3) the following sub-regulations shall be substituted, namely: - "(2) The FME shall ensure that the Net Asset Value (NAV) is disclosed to the investors at least on a yearly basis, ....
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....have any person resident in India as their ultimate beneficial owners and not more than one-third of the corpus of the scheme is invested in an Investee Company and its associates, or (ii) the FME and its associate investing in the scheme, are persons resident in India or have any person resident in India as their ultimate beneficial owner, the investments under the scheme are made only in permissible investments, as per sub-regulation (1) of regulation 22, in IFSC or foreign jurisdictions and the said contribution does not exceed 25% of the corpus of the scheme." 12. In regulation 28 of the principal regulations, in sub-regulation (3), for the words "detailed under the Chapter II", the following words shall be substituted, namely: - "specified under these regulations" 13. In regulation 28 of the principal regulations, in sub-regulation (4), the clause (c) shall be substituted as follows, namely: - "(c) The scheme is a fund of funds scheme investing in scheme(s) with similar requirements, wherein the scheme in IFSC does not involve active management by the FME and the details of inter-se allocation of the underlying scheme(s) are disclosed in the pl....
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....tion proceeds of the Restricted scheme, while "junior units" or "subordinate units" indicate such classes of units, including mezzanine units, the rights of which over the distribution proceeds of the scheme would be inferior to that of senior units." 18. In regulation 36 of the principal regulations, for the sub-regulations (3) and (4), the following sub-regulations shall be substituted, namely: - "(3) The FME shall ensure that the NAV is disclosed to the investors at least on a monthly basis in case of an open-ended scheme and half-yearly in case of a close -ended scheme, starting from the month or half-year period, as the case may be, in which the scheme commences investment activities, excluding investments made in accordance with second proviso to sub-regulation (1) of regulation 34, and within such time period as disclosed in the placement memorandum of the scheme. Provided that such half-year period may be enhanced to one year in case of a close -ended scheme on prior approval of at least seventy-five per cent. (75%) investors in the scheme by value of their investments. (4) The FME shall ensure that the portfolio under the scheme is disclosed t....
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.... ended scheme, at least 2.5% of the corpus or USD 750,000, whichever is lower, subject to such contribution not exceeding 10% of the corpus; (b) In case of an open-ended scheme, at least 5% of the corpus or USD 1,500,000, whichever is lower, subject to such contribution not exceeding 10% of the corpus: Provided that the contribution by the FME or its associate shall not be mandatory in case of relocated schemes established or incorporated or registered outside India to IFSC: Provided further that ceiling of 10% shall not apply to a restricted scheme if: (i) the FME and its associate investing in the scheme, are persons resident outside India and do not have any person resident in India as their ultimate beneficial owners and not more than one-third of the corpus of the scheme is invested in an Investee Company and its associates; or (ii) the FME and its associate investing in the scheme, are persons resident in India or have any person resident in India as their ultimate beneficial owner, the investments under the scheme are made only in permissible investments, as per sub-regulation (1) of regulation 34, in IFSC or foreign jurisdictions....
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....he third proviso, the following proviso shall be substituted, namely: - "Provided also that in case of a fund of funds scheme, the limit on sectoral cap shall not be applicable if such scheme is investing in other scheme(s) which are regulated by the concerned regulatory authority in their home jurisdiction(s) and are permitted for offering to retail investors in their home jurisdiction(s)." 31. In regulation 48 of the principal regulations, in sub-regulation (2), after the words and symbol "proposed tenure of the scheme" and before the words "fees and expenses", the words and symbol ", methodology of computation and disclosure of NAV," shall be inserted. 32. In regulation 48 of the principal regulations, in sub-regulation (2), after the words and symbol "fees and expenses," and before the words "risk management practices", the words and symbol "conflicts of interest," shall be inserted. 33. In regulation 48 of the principal regulations, for the sub-regulations (4) and (5), the following sub-regulations shall be substituted, namely: - "(4) The FME shall ensure that the NAV is disclosed to the investors on a daily basis in case of an open-ended scheme and ....
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....n the scheme in IFSC does not involve active management by the FME and the details of inter-se allocation of the underlying scheme(s) are disclosed in the offer document of the scheme; (iii) an index scheme; or (iv) a fund of funds scheme investing only in index schemes or passive ETFs, and the details of inter-se allocation of the underlying scheme(s) are disclosed in the offer document of the scheme." 38. In regulation 52 of the principal regulations, in sub-regulation (3), for the words "detailed under Chapter II", the following words shall be substituted, namely: - "specified under these regulations" 39. In regulation 72 of the principal regulations, in sub-regulation (1), after the words "USD 3 billion", and before the words "as at the close", the words and symbol ", excluding the AUM of fund of funds schemes," shall be inserted. 40. In regulation 80 of the principal regulations, for clause(a), the following clause shall be substituted, namely: - "(a) it complies with regulation 34 of the IFSCA (Capital Market Intermediaries) Regulations, 2025." 41. In regulation 80 of the principal regulations, in clause (b), for the words and s....
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...." 48. In the principal regulations, in the Third Schedule, in Part B titled 'Code of Conduct and Obligations of Fiduciaries', in item (a), in sub-item (ix), the following shall be omitted, namely: "(c) appointed auditors to audit its accounts;" and "(e) appointed fund administrators registered with the Authority or capabilities to undertake such activities inhouse by the FME" 49. In the principal regulations in the Third Schedule, in Part B titled 'Code of Conduct and Obligations of Fiduciaries', in item (a), after sub-item (ix), the following sub-item shall be inserted, namely: - "(ixa) ensure before the execution of the agreement with any investor in the scheme, that it has, - (a) appointed auditors to audit its accounts; (b) appointed fund administrators registered with the Authority or has satisfied itself that FME has the capabilities to undertake such activities in-house; (c) appointed independent valuer for valuation of the portfolio of scheme; and (d) appointed the custodian for the scheme, if applicable, in terms of regulation 132." 50. In the principal regulations, in the Third Schedule, in Part B tit....