Framework for enabling Ancillary Services at International Financial Services Centres

CIRCULAR F. No. 206/IFSCA/Anc.Aux/2020-21 February 10, 2021 Sub: Framework for enabling Ancillary services at International Financial Services Centres 1. Considering the importance of professional and other service providers for the development of financial products, financial services and financial institutions in the International Financial Services Centres (IFSC), a framework for enabling ancillary services has been provided for as under: A. Applicability: This framework shall be applicable to all ancillary service providers (hereinafter referred to as “service provider(s)”) engaged in one or more permissible ancillary services within the IFSC. B. Definition: Ancillary services shall mean those services which directly or indirectly aid, help, assist or strengthen or are attendant upon or connected with the services, as detailed under sub- clauses (i) to (xi) of clause (e) of sub- section (1) of section 3 of the IFSCA Act, 2019. C. Permissible ancillary services: The service providers may engage in any one or more of the following activities: (i) Legal, Compliance and Secretarial; (ii) Auditing, Accounting, Bookkeeping and Taxation Services; (iii) Professional & Management Consulting Services; (iv) Administration, Assets Management Support Services and Trusteeship Services; (v) Any other services as approved by IFSCA from time to time. The detailed activities of such permissible ancillary services are detailed at Annexure – I. D. Eligibility Conditions: The following entities are eligible to act as a service provider so as to provide permissible ancillary services pertaining to activities in relation to financial products, financial services and financial institutions in the IFSC: (i) Any existing or newly incorporated entity set up in the IFSC or (ii) Any Indian or foreign incorporated entity by establishing a branch or a subsidiary E. Service Recipients: Service providers can provide permissible services to any one or more of the following: (i) Entity(ies) set up in the IFSC; (ii) Financial services entities from foreign jurisdictions for various activities in the IFSCs in India or other related activities overseas; (iii) Indian entities who propose to open, set up or carry out operations in IFSCs or foreign jurisdiction, provided consideration is received in freely convertible foreign currency. F. Application Process: An applicant desirous to act as a service provider and eligible under this framework to provide permissible ancillary services shall apply to IFSCA in the application form specified at Annexure-II. G. Currency for conduct of business: Service providers shall transact in freely convertible foreign currency only. However, the service providers may defray their administrative expenses in INR by maintaining an INR account. H. Maintenance of Books of Accounts, Records and Documents Every service provider shall maintain its books of accounts, records, and documents in such foreign currency, as may be declared at the time of making an application. I. Submissions of Report / Information (i) Every service provider shall furnish the following information to the IFSCA: a. Annual financial statements for the entity registered. b. Confirmation of compliance with the regulations, circulars, guidelines and/or directions as issued by the International Financial Services Centres Authority from time to time. c. Details of material regulatory action, if any (ii) Every service provider authorized by the IFSCA shall submit the financial information to the IFSCA in US Dollar, unless otherwise specified by the IFSCA. (iii) The IFSCA from time to time may call for any information, documents, or records as it may deem necessary from the service provider. J. Compliance with other requirements The service providers shall comply with all the applicable and relevant regulatory obligations, standards, policies and guidelines as issued by any other competent authority(ies). K. Action in case of default If a service provider fails to comply with any of the requirement under this framework and/or other directions and guidelines issued from time to time, the IFSCA may take appropriate action as it deems fit, after giving a reasonable opportunity to make its written submissions. L. Fees The applicant / registered entity shall pay to IFSCA such fees and charges as specified from time to time. M. Power to remove difficulties, specify procedures and issue clarifications In the event of any difficulty in giving effect to this framework or to ensure effective operation of this framework, the IFSCA may specify the necessary norms, procedures, processes, manners and may also provide relaxations, by way of guidelines or circulars. 2. This circular is issued in exercise of powers conferred by section 12 of the International Financial Services Centres Authority Act, 2019 to develop and regulate the financial products, financial services and financial institutions in the International Financial Services Centres. 3. A copy of this circular is available on the website of the International Financial Services Centres Authority at www.ifsca.gov.in Yours faithfully, Pavan Shah Deputy General Manager pavan.shah@ifsca.gov.in Encl: As above Annexure-I Detailed activities of such permissible ancillary services 1. Legal services, Compliance & Secretarial Services: 1.1. Legal Services: 1.1.1. Legal advisory services: Legal advisory services shall include tendering legal opinions, drafting legal documents including pleadings, representing before IFSCA or entities regulated by it. It shall also include research and other work for the preparation of a non-judicial case (e.g. researching legal documentation, reviewing reports), and the execution of post-litigation work. 1.1.2. Legal documentation and certification services: Preparation, drawing up and certification services of legal documents. These services comprise of related legal services including the provision of advice and the execution of various tasks necessary for the drawing up or certification of documents including commercial contracts, business charters, etc. 1.1.3. Other legal advisory and information services: Advisory services to clients related to their legal rights and obligations and providing information on legal matters not classified elsewhere. This includes services such as escrow and settlement services. 1.2. Compliance & Secretarial Services: 1.2.1. Compliance Services means providing advice, consultancy, assistance or other related services, for fulfilling legal obligations/compliances under various laws for the time being in force; 1.2.2. Secretarial services in relation to any applicable law including laws of foreign jurisdictions. 2. Accounting, Auditing, Bookkeeping & Taxation Services: 2.1. Accounting and auditing services: 2.1.1. Financial auditing services: Examination of the accounting records and other supporting evidence of an organization for the purpose of expressing an opinion as to whether financial statements of the organization present its financial and operational position fairly on a given date, in accordance with generally accepted accounting principles. 2.1.2. Accounting review services: Reviewing services of annual and interim financial statements and other accounting information. The scope of a review is less than that of an audit and therefore the level of assurance provided is lower. 2.1.3. Compilation of financial statements services: This includes compilation of financial statements from information provided by the client. No assurances regarding the accuracy of the resulting statements are provided. This service shall also include the preparation services of business tax returns, when provided as a bundle with the preparation of financial statements for a single fee. 2.1.4. Other accounting services: Other accounting services such as attestations, valuations, preparation services of pro forma statements, etc. 2.2. Bookkeeping services, except tax returns: Bookkeeping services consisting of classifying and recording business transactions in terms of money or some unit of measurement in the books of account. 2.3. Taxation Services: 2.3.1. Business Tax Planning and Consulting Services: Advisory services to enterprises to do tax planning. 2.3.2. Business Tax Preparation and Review Services: Services consisting of preparing or reviewing various returns and reports required for compliance with the income tax laws and regulations and representing before the tax authorities. This may also include tax planning and control. 2.3.3. Other Tax Related Services: Services consisting of assisting entities in tax planning and preparing all documentation required by law.