IFSCA Issues Norms for Third-Party Fund Management

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  • Last Updated on 2 August, 2025

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Notification No. IFSCA/GN/2025/007, Dated 24.07.2025

IFSC Authority Introduces Third-Party Fund Management Framework

The International Financial Services Centres (IFSC) Authority has amended the Fund Management Regulations, 2025, to create a structured regulatory framework for Third-Party Fund Management Services. This significant development aims to expand the scope of fund management activities within IFSCs, allowing for greater flexibility and participation by qualified entities. It reflects the Authority’s commitment to evolving its regulatory regime in line with global best practices.

Registered FMEs Can Manage Schemes on Behalf of Others

Under the new framework, a registered Fund Management Entity (FME) is now permitted to manage investment schemes on behalf of third parties, subject to obtaining prior authorisation from the Authority. This move opens up new avenues for fund managers to operate as service providers for other investment entities, fostering a more dynamic and diverse financial ecosystem in the IFSC.

Eligibility and Regulatory Requirements for FMEs

To participate in third-party fund management, an FME must be established in the IFSC as a company, LLP, or any other form as permitted by the Authority. Additionally, the entity must fulfill specific eligibility criteria, including compliance with operational guidelines, governance norms, and risk management protocols. These measures ensure that only credible and capable entities are entrusted with managing third-party funds.

Minimum Net Worth and Compliance Obligations

The framework also stipulates a minimum net worth requirement for FMEs wishing to offer third-party fund management services, ensuring financial stability and capacity. Entities must also adhere to ongoing compliance obligations, including regular reporting, audit requirements, and adherence to anti-money laundering (AML) and Know Your Customer (KYC) norms. These provisions are designed to safeguard investor interests and maintain the integrity of the financial system within the IFSC.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied