IFSCA has vide its circular dated 10th February, 2021 provided detailed guidelines regarding providing of ancillary services at its GIFT- IFSCA. Ancillary services will mean anything from legal, compliance, secretarial, to auditing, accounting, book-keeping, taxation, professional & management consultancy services, trustee management, administration, asset management etc.
The requirements are detailed as to what the service providers can do, their duties and obligations etc. and the responsibilities of the entities in IFSCA. Gist of the regulations are given below:
- 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:
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.
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 subclauses (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.
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.