Ease of doing business - Filing of Schemes or funds under IFSCA (Fund Management) Regulations 2022.

CIRCULAR F. No. IFSCA-AIF/32/2024-Capital Markets April 05, 2024 To, Fund Management Entities (FMEs) in International Financial Services Centres (IFSCs) Madam/Sir, Subject: Ease of doing business - Filing of Schemes or funds under IFSCA (Fund Management) Regulations 2022. 1. Reference is drawn to regulation 31(2) of the International Financial Services Centres Authority (Fund Management) Regulations, 2022 (“FM Regulations”). 2. In this regard, to infuse further ease in doing business in the fund management ecosystem at the IFSC, it has been decided that henceforth, for all schemes or funds to be launched under Chapter III (except Part C: Retail Schemes), of the FM Regulations, the Fund Management Entity (FME) shall submit the Private Placement Memorandum (PPM) along with other documents ensuring minimum disclosures and other requirements as outlined in this circular, to the Authority. After filing these documents along with the disclosures and complying with other requirements stipulated in this circular FMEs may launch the respective schemes. IFSCA will also, in due course establish a web-portal for filing of scheme documents before an offer is made. 3. Scheme / Fund documents to be submitted: The Scheme or Fund documents shall be submitted with the Authority in the Application Form specified in Annex- A hereto. Minimum disclosures to be made in the PPM of each scheme / fund: 4. The FME shall ensure that the PPM of each Scheme or Fund, inter-alia, contains the following minimum disclosures: a. A detailed illustrative/ diagrammatic/ graphical representation of the Scheme or Fund Structure; b. Broad details of the target investors and the portfolio investments; c. The Governance Structure encompassing: i. Complete details of the company/limited liability partnership (LLP)/Trust/Trust Company; ii. Details of the investment manager and their key managerial personnel at IFSC; iii. Details of the Investment Committee/ advisory board/ limited partner advisory committee (LPAC)/ Investment Advisor. d. The principal terms defining the following: i. Fund Offering; ii. Target Investors; iii. Tenure of the Scheme or Fund; iv. Details of the contribution by the FME to the scheme including exception sought, if any; Capital Structure of the scheme which shall categorically distinguish different classes of units and their minimum capital commitment/contribution; v. Closings- Definite timelines for the initial closing/ initial offer period and the final closing, including the details of the subsequent closing (if applicable); vi. Details of investment period/commitment period (If applicable); vii. Transfer and transmission of units; viii. Gating restriction on withdrawal of units (if applicable); ix. Complete details of the terms of Indemnification; x. Details of Warehoused Investments including the period and valuation of the investments (if applicable); xi. Details of Side Letters and its impact on other investors (if applicable); xii. Details of Co-investment in line with the FM Regulations (if applicable); xiii. Details of Borrowings along with the maximum limit of leverage (if applicable) in line with the FM Regulations; xiv. Details of Temporary Deployment of Surplus Funds in line with the FM Regulations; xv. Comprehensive disclosure of all Fees and Expenses of the scheme as well as the FME including the Setup Fee/expenses, Management Fees, Performance Fees, Exit Fees, Trusteeship fee, Placement Agent fees and its incidence, etc.; xvi. Details of the distribution to investors; xvii. Details of Distribution-in-kind/in-specie distributions (if applicable). xviii. Details of Giveback by the Contributors (if applicable); xix. Redemption, Compulsory redemption, redemption procedure and details of delay/suspension of redemption including the exit fees, and the redemption price, in line with the FM Regulations; xx. Valuation and Reporting requirements, in line with the FM Regulations; xxi. Details of Termination and Winding Up of the Scheme or Fund; xxii. Details of Removal of the FME; xxiii. Details of Parallel Vehicles/ Alternative Investment Structures and Successor Funds (if applicable); xxiv. Details of the Custodian appointed, in line with the FM Regulations; xxv. Provision for Grievance Redressal mechanism with the FME as the first level and the IFSCA at subsequent levels of escalation for the investors; xxvi. Other matters as may be considered necessary for informed decision making by the investors. e. Investment Objectives, Strategy and Guidelines should be well-defined with reasonable explanation for the investment strategy including fund of fund structures. The principal strategy of the Master Fund, where applicable, should be included. f. A Section on- Determination of Net Asset Value of the Units; g. A Section on- Conflicts of Interest; h. A Section on- Risk Factors; i. A Section on- Legal, Regulatory and Tax Considerations; j. A Section on- Illustration of the Distribution Waterfall; k. A Section on- Illustration of fees and expenses; l. A Section on the disciplinary history of the Trust, Trustee, FME and their respective partners, designated partners and directors; m. Glossary (if desired); n. A declaration by authorised person of the FME that all relevant disclosures, material to the Scheme or Fund, have been disclosed in the PPM; o. An IFSCA disclaimer on the cover page of the placement memorandum, as follows: “It is to be distinctly understood that filing of the placement memorandum with the Authority is for the purpose of record and should not in any way be deemed or construed that the same has been cleared or approved by the Authority. The Authority does not take any responsibility either for the financial soundness of any scheme or for the correctness of the statements made or opinions expressed in the placement memorandum. The Fund Management Entity, has certified that the disclosures made in the placement memorandum are adequate and are in conformity with the IFSCA (Fund Management) Regulations, 2022. This requirement is to facilitate investors to take an informed decision for making investment. The Fund Management Entity issuer is responsible for the correctness, adequacy and disclosure of all relevant information in the placement memorandum.” 5. The FME shall ensure that the Cover Page of the PPM, for each Scheme or Fund, prominently displays the following: "This PPM has been prepared in accordance with the IFSCA (Fund Management) Regulations, 2022, and subsidiary directions issued thereunder. The PPM has been submitted to the Authority only for the purpose of record." 6. The FME may extend the validity of the placement memorandum beyond 6 months as provided under 19(3) and 31 (2) of the FM Regulations by refiling the documents with the Authority and paying the applicable fee as per circular no. F. No.865/IFSCA/Banking/Fee Revision/2022-23 dated May 17, 2023. on “Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC”. 7. The scheme filling fees shall be remitted in US Dollars at the time of filing the scheme documents with the Authority. 8. The FMEs shall also submit all the necessary documents as specified in Annex-B hereto along with the scheme application. 9. On receipt of the application, the Authority will issue a Letter of Acknowledgment that the same has been taken on record. 10. The Circulars bearing Nos. IFSCA/1/2023-Capital Markets dated February 06, 2023 and IFSCA-AIF/47/2023-Capital Markets dated September 06, 2023 are subsumed into this Circular and thereby stand repealed from the date of issuance of this Circular. 11. This circular is issued in the exercise of the powers conferred by Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019, read with regulation 146 of the FM Regulations and shall come into force with immediate effect. 12. A copy of this circular is available on the International Financial Services Centres Authority website at www.ifsca.gov.in.