Full Text
REGD. No. D. L.-33004/99
The Gazette of India
CG-GJ-E-10092026-276116
EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
No. 538]
NEW DELHI, MONDAY, SEPTEMBER 7, 2026/BHADRA 16, 1948
INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY
NOTIFICATION
Gandhinagar, the 31st August 2026
International Financial Services Centres (Fund Management) (Second Amendment) Regulations, 2026
IFSCA/GN/2026/ 015.—In exercise of the powers conferred by sub-section (1) of section 28 read with sub-
section (1) of section 12 and sub-section (1) of section 13 of the International Financial Services Centres Authority
Act, 2019 (50 of 2019), and section 28C of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the
International Financial Services Centres Authority hereby makes the following regulations, to further amend the
International Financial Services Centres Authority (Fund Management) Regulations, 2025, (hereinafter referred to as
the 'principal regulations'), namely: -
1. (1) These regulations may be called the International Financial Services Centres Authority (Fund Management)
(Second Amendment) Regulations, 2026.
(2) They 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)
(ii)
(iii)
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;
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
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 called, as the case may be.
Provided that a person appointed as a fiduciary of a scheme, in terms of sub-regulation (2) of
regulation 17 of these regulations, shall not be deemed to be an associate of the FME, unless such
person holds any direct economic interest or control in such FME.
Explanation. - For the purpose of this clause, “person” shall have the same meaning assigned to it under
the International Financial Services Centres Authority (Anti Money Laundering, Counter Terrorist
Financing and Know Your Customer) Guidelines, 2022, as may be amended from time to time."
3. In regulation 22 of the principal regulations, in sub-regulation (1), in the proviso, the words and symbol
"certificates of deposit," shall be omitted.
4. In regulation 22 of the principal regulations, in sub-regulation (1), after the first proviso, the following proviso
shall be inserted, namely: -
"Provided further that any monies received from the contributors prior to the first close of the scheme shall
be deployed only in such permissible investments as per sub-regulation (1) of regulation 22 that support
preservation of capital and adequate liquidity of the monies deployed, such as bank deposits with option for
premature withdrawal, overnight funds, etc., as disclosed by the FME in the placement memorandum."
5. In regulation 23 of the principal regulations, in sub-regulation (3), the following proviso shall be inserted,
namely: -
"Provided that a Venture Capital scheme may further invest during the subsequent round(s) of fund raising in
such Investee Companies where ten (10) years have elapsed since incorporation of such companies, subject
to the following conditions:
(i)
(ii)
(iii)
The subsequent investment(s) in such Investee Companies shall be in accordance with the
investment objectives and investment strategy of the scheme, provisions of its placement
memorandum and internal policies of the FME in this matter;
In case of exclusion of an investor in an Investee Company, either by choice of the investor or the
FME, in accordance with the placement memorandum and contribution agreement, such investor
shall not be allowed to participate in the subsequent round(s) of investment in such company; and
The contribution by the scheme in any subsequent round should be limited to the extent that the
post-issue beneficial 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, starting from the financial year in which the scheme commences investment activities, excluding
investments made in accordance with second proviso to sub-regulation (1) of regulation 22, and within such
time period as disclosed in the placement memorandum of the scheme.
(3) The FME shall ensure that the portfolio under the scheme is disclosed to the investors at least on a yearly
basis, starting from the financial year in which the scheme commences investment activities, excluding
investments made in accordance with second proviso to sub-regulation (1) of regulation 22, within one (1)
month of the end of each financial year."
8. In regulation 26 of the principal regulations, in sub-regulation (2), the words "In line with", shall be substituted
with the words "For the purpose of computation and disclosure of NAV to the investors and in line with".
9. In regulation 26 of the principal regulations, in sub-regulation (2), for the existing proviso, the following proviso
shall be substituted, namely: -
"Provided that this requirement shall not apply to the investments made by a scheme in other scheme(s), that
are regulated by a financial sector regulator, directly or through a manager, in IFSC, India or foreign
jurisdiction(s), and valued by any independent entity."
10. In regulation 27 of the principal regulations, in sub-regulation (1), after the words "on an annual basis", the
words and symbol ", starting from the financial year in which the scheme commences investment activities,
excluding investments made in accordance with second proviso to sub-regulation (1) of regulation 22" shall be
inserted.
11. In regulation 28 of the principal regulations, the sub-regulation (1) shall be substituted as under, namely: -
"(1) Under a Venture Capital scheme, the FME or its associate shall contribute an amount which shall be at
least 2.5% of the corpus or USD 750,000, 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 the ceiling of 10% shall not apply to a Venture Capital 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 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 placement memorandum of the scheme."
14. In regulation 31 of the principal regulations, in sub-regulation (3), for the existing proviso, the following proviso
shall be substituted, namely: -
“Provided that if a FME fails to achieve the minimum size of corpus as specified under sub-regulation (2) of
regulation 35, within the specified time period, it shall have the option to extend the validity of the placement
memorandum, wherein each such extension shall be for a period of six (6) months starting from the day after the
expiry of the existing validity of the placement memorandum, by filing an application at such time when the
placement memorandum is still valid, accompanied by a fee equal to-
(i) for the first extension, twenty-five per cent. (25%) of the applicable fee for filing of a fresh scheme, as
may be prevalent at the time of such extension; and
(ii) for each subsequent extension, fifty per cent. (50%) of the applicable fee for filing of a fresh scheme, as
may be prevalent at the time of such extension."
15. In regulation 34 of the principal regulations, in sub-regulation (1), in the proviso, the words and symbol
"certificates of deposit," shall be omitted.
16. In regulation 34 of the principal regulations, in sub-regulation (1), after the existing proviso, the following
proviso shall be inserted, namely: -
“Provided further that any monies received from the contributors prior to the first close in case of a close-
ended scheme, or prior to raising USD 1 Million in funds in case of an open-ended scheme, shall be deployed
only in such permissible investments as per sub-regulation (1) of regulation 34 that support preservation of
capital and adequate liquidity of the monies deployed, such as bank deposits with option for premature
withdrawal, overnight funds, etc., as disclosed by the FME in the placement memorandum."
17. In regulation 35 of the principal regulations, after sub-regulation (5), the following sub-regulation shall be
inserted, namely: -
“(6) The FME shall ensure that any differential distribution rights to investors through issuance of senior, and
junior or subordinate units in a Restricted 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 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 to the investors at least on a
quarterly basis, starting from the quarter in which the scheme commences investment activities, excluding
investments made in accordance with second proviso to sub-regulation (1) of regulation 34, within one (1)
month from the end of each quarter."
19. In regulation 38 of the principal regulations, in sub-regulation (2), the words “In line with”, shall be substituted
with the words "For the purpose of computation and disclosure of NAV to the investors and in line with" shall be
inserted.
20. In regulation 38 of the principal regulations, in sub-regulation (2), for the existing proviso, the following proviso
shall be substituted, namely: -
"Provided that this requirement shall not apply to the investments made by a scheme in other scheme(s), that
are regulated by a financial sector regulator, directly or through a manager, in IFSC, India or foreign
jurisdiction(s), and valued by any independent entity."
21. In regulation 39 of the principal regulations, for the sub-regulation (1), the following sub-regulation shall be
substituted, namely: -
“(1) The FME shall compute the NAV of each restricted scheme at least on a monthly basis, starting from the
month in which the scheme commences investment activities, excluding investments made in accordance
with second proviso to sub-regulation (1) of regulation 34:
Provided that in case of a close - ended restricted scheme the computation of NAV shall take place at
least half-yearly, starting from the half-year period in which the scheme commences investment
activities, excluding investments made in accordance with second proviso to sub-regulation (1) of
regulation 34.
Provided further that for such close - ended schemes for which the FME has obtained prior approval
from investors in terms of proviso to sub-regulation (3) of regulation 36, the computation of NAV shall
take place at least yearly, starting from the financial year in which the scheme commences investment
activities, excluding investments made in accordance with second proviso to sub-regulation (1) of
regulation 34."
22. In regulation 40 of the principal regulations, for the sub-regulation (1), the following sub-regulation shall be
substituted, namely: -
"(1) Under a restricted scheme, the FME or its associate shall contribute an amount,
(a) In case of a close - 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 and the said contribution does not exceed 25% of the corpus of the scheme."
23. In regulation 40 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"
24. In regulation 40 of the principal regulations, in sub-regulation (4), in clause (b), the words 'or' shall be omitted.
25. In regulation 40 of the principal regulations, in sub-regulation (4), in clause (c), the mark “.” shall be substituted
with the mark ";".
26. In regulation 40 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 placement memorandum of the scheme.”
27. In regulation 40 of the principal regulations, in sub-regulation (4), after the clause (c), the following clauses shall
be inserted, namely: -
"(d) The scheme is an index scheme; or
(e) The scheme is a fund of funds scheme investing in index schemes or passive ETFs, and the details of
inter-se allocation of the underlying schemes are disclosed in the placement memorandum of the scheme."
28. In regulation 46 of the principal regulations, in sub-regulation (1), in the proviso, the words and symbol
"certificates of deposit," shall be omitted.
29. In regulation 46 of the principal regulations, in sub-regulation (1), after the existing proviso, the following
proviso shall be inserted, namely: -
"Provided further that any monies received from the contributors prior to achieving the minimum size as
specified under sub-regulation (6) of regulation 47 in case of a close-ended scheme or prior to raising USD 1
Million in funds in case of an open-ended scheme, shall be deployed only in such permissible investments as
per sub-regulation (1) of regulation 46 that support preservation of capital and adequate liquidity of the
monies deployed, such as bank deposits with option for premature withdrawal, overnight funds, etc., as
disclosed by the FME in the offer document."
30. In regulation 47 of the principal regulations, in sub-regulation (4), for the 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 at least on weekly basis in case of a close -ended scheme, starting from the day or week,
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 46, in such manner as specified by the
Authority.
(5) The FME shall ensure that the portfolio under the scheme is disclosed to the investors at least on a
quarterly basis, starting from the quarter in which the scheme commences investment activities, excluding
investments made in accordance with second proviso to sub-regulation (1) of regulation 46, within one (1)
month from the end of each quarter."
34. In regulation 50 of the principal regulations, in sub-regulation (2), the words “In line with", shall be substituted
with the words "For the purpose of computation and disclosure of NAV to the investors and in line with" shall be
inserted.
35. In regulation 50 of the principal regulations, in sub-regulation (2), for the existing proviso, the following proviso
shall be substituted, namely: -
"Provided that this requirement shall not apply to the investments made by a scheme in other scheme(s), that
are regulated by a financial sector regulator, directly or through a manager, in IFSC, India or foreign
jurisdiction(s), and valued by any independent entity."
36. In regulation 51 of the principal regulations, for the sub-regulation (1), the following sub-regulation shall be
substituted, namely: -
"(1) The FME shall ensure that the NAV of each retail scheme is computed on a daily basis in case of an open-
ended scheme, and on a weekly basis in case of a close-ended scheme, starting from the day or week, 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 46, in such manner as specified by the
Authority."
37. In regulation 52 of the principal regulations, in the sub-regulation (1), for the first and second proviso, the
following proviso shall be substituted, namely: -
"Provided that the contribution by the FME or its associate shall not be mandatory in case of -
(ii) relocated schemes established or incorporated or registered outside India to IFSC;
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 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 symbols "IFSCA (Capital Market
Intermediaries) Regulations, 2021", the words and symbols “IFSCA (Capital Market Intermediaries)
Regulations, 2025" shall be substituted.
42. In regulation 104 of the principal regulations, in sub-regulation (5), in Explanation II, after the words "in
accordance with regulation 30", the words and symbols ", and shall accordingly be taken on record by the
Authority." shall be inserted.
43. In regulation 119 of the principal regulations, in sub-regulation (2), after clause (f), the following clause shall be
inserted, namely: -
"(fa) records pertaining to internal policies, frameworks, plans or standard operating procedures prepared by
the FME in compliance with these regulations;"
44. In regulation 134 of the principal regulations, in sub-regulation (1), the word "four", appearing after the words
"not later than", shall be substituted with the word and symbols "six (6)".
45. In regulation 134 of the principal regulations, in sub-regulation (3), the word "four”, appearing after the words
"the investors within", shall be substituted with the word and symbols "six (6)".
46. In regulation 135 of the principal regulations, in sub-regulation (1), the following proviso shall be inserted,
namely: -
"Provided that such requirement shall not be applicable for the FMEs which are set up by the Government
and Government related investors such as central banks, sovereign wealth funds, international or multilateral
organizations or agencies including entities controlled or at least seventy-five per cent. (75%) directly or
indirectly owned by such Government and Government related investors wherein such investors are the sole
contributors, directly or indirectly, of the schemes launched by such FMEs."
47. In the principal regulations, in Third Schedule, in Part A titled 'Code of Conduct and Obligations of the Fund
Management Entity', after item (n), the following item shall be inserted, namely: -
"(o) The FME shall ensure that all the policies, frameworks, plans, by whatever name called, that are
prepared in compliance with these regulations, approval from the Board of Directors or designated partners
or trustees, as may be the case, of the FME, or from the appropriate authorised committee or designated
senior management official(s) of the FME to whom such powers have been delegated, shall be obtained."
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 in-
house 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 titled 'Code of Conduct and Obligations of
Fiduciaries', in item (a), in sub-item (xii), for the words “provided in Second Schedule", the words “specified
under these regulations" shall be substituted.
51. 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 (xiii), the following sub-item shall be inserted, namely: -
"(xiv) shall ensure that, when required in terms of regulations 23(2), 23(4), 35(3), 35(4) and 36(3), the FME
either obtains the approval of the investors or makes adequate and prominent disclosures in the placement
memorandum and also include in the investor agreement."
PRAVEEN TRIVEDI, Executive Director
[ADVT.-III/4/Exty./307/2026-27]
Note:
1. The International Financial Services Centres Authority (Fund Management) Regulations, 2025the principal
regulations were published in the Gazette of India on February 19, 2025, vide F. No. IFSCA/GN/2025/002.
2. International Financial Services Centres Authority (Fund Management) (Amendment) Regulations, 2025,
were published in the Gazette of India on July 31, 2025, vide F. No. IFSCA/GN/2025/007.
3. International Financial Services Centres Authority (Fund Management) (Amendment) Regulations, 2026,
were published in the Gazette of India on January 30, 2026, vide F. No. IFSCA/GN/2026/006.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.
KUMER
CHAND
MEENA
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