IFSCA has vide its circular dated 10th June, 2021 clarified certain aspects relating to enabling ancillary services to be provided at IFSC Gift City, Ahmedabad. These ancillary services pertain to legal, compliance, secretarial, book keeping, auditing, accounting, taxation, professional & management consultancy, asset management, trusteeship etc. The earlier circular issued on 10th February, 2021 laid down certain parameters to be followed by entities wishing to register themselves at IFSC in order to provide ancillary services. Some changes have been made in these conditions, such as:
- In Eligibility Conditions it is clarified that the entities may be set up in the form of a company, LLP or registered partnership or their branch or any other form as may be approved by the IFSCA;
- In the case of service recipients i.e. entities registered in IFSC, it has been modified to provide that services can be provided to entities from foreign jurisdictions for various permissible ancillary services. Hitherto it was mentioned as “financial service entities from foreign jurisdictions” now the word “financial service” has been removed, so any entities from foreign jurisdictions who are established in IFSC are entitled to receive the permissible ancillary services;
- Annexure I to the circular of February, 2021 gives a detailed list of ancillary activities that can be carried out in the IFSC. To that has been added the following in the category of Professional Services viz.
(d) Advisory and Facilitation Services to entities in IFSC/outside India in relation to their capital raising activities outside India.
e) Advisory and Facilitation Services to entities in IFSC/outside India in relation to their merger & acquisition or capital restructuring activities outside India.
4. In Trusteeship services category, following has been provided viz.
Services such as Trusteeship for AIFs, InvIT and REIT, Security Trustee and other related financial services such as escrow agent.
Earlier this clause provided for trusteeship services in relation to debentures, bonds, management of private trust, external commercial borrowing, facility & escrow agent, safe keeping and other related financial services. Now all these have been substituted with the above services.
Further it has been provided that the applicants shall not take client assets, including money, directly or indirectly in its custody and shall only provide permissible services as enumerated in these circulars. It would be better if IFSCA codified these guidelines properly into regulations instead of keeping on amending the circulars like income tax does.
Further if the applicants are undertaking activities of debenture trustee, investment advisor, AIF, fund management etc. then they are required to take registrations separately for each category of service being provided. This i think is a bit onerous from the compliance point of view.
Copies of these circulars can be found on the IFSCA site.