The IFSCA, in order to facilitate setting up of the Aircraft Leasing business in the International Financial Services Centres has specified the following framework for entities to get registered under Finance Company Regulations as a ‘Finance Company’ or a ‘Finance Unit’ for undertaking aircraft lease transactions:
Application for Registration
Entities desiring to undertake permissible activities as lessors must submit an application to IFSCA. This application should adhere to the specified format and be accompanied by the requisite fees. The issuance of a Certificate of Registration by IFSCA is a prerequisite before engaging in permissible activities as a lessor. It’s noteworthy that entities wishing to offer ‘Asset Management Support Services’ must obtain separate authorization under the Ancillary Services framework.
Aircraft Operating Lease
Part I of the framework delineates the permissible activities for aircraft operating lease. This includes a spectrum of activities ranging from operating leases for aircraft and ground support equipment to asset management support services for owned or leased assets. The framework also allows for sale and leaseback transactions and other related activities with prior approval from IFSCA. The capital requirement for entities undertaking aircraft operating lease is specified at a minimum owned fund of USD 200,000.
Fees and Financial Considerations
Entities must adhere to the fee structure outlined in the Fee Circular. The fees cover various stages, including application fees, registration fees, and recurring annual fees. The current applicable fees, as per the Fee Circular, are specified for clarity.
Aircraft Financial Lease
Part II of the framework addresses aircraft financial lease activities, covering financial lease arrangements for aircraft, ground support equipment, and aviation training simulation devices. Similar to operating leases, entities engaging in financial leasing must meet specific capital requirements, with a minimum owned fund of USD 3 million.
Prudential and Other Requirements
Part III outlines general conditions, including the necessity for all transactions to be conducted in freely convertible foreign currency. Entities are required to maintain books of accounts, records, and documents as per applicable law, with an emphasis on transparency and compliance with regulatory obligations.