The Ministry of Finance vide its press release dated 7th February 2022 has invited comments/suggestions from public on the Draft IFSCA (Fund Management) Regulations, 2022 on or before February 28, 2022.
The draft regulations detail the role of various entities, prescribes code of conduct, advertisement code, investment valuation norms and important governance requirements.
The salient features of the proposed regulations are as under:
A fund manager intending to undertake host of activities related to fund management viz.manage retail schemes (including Exchange Traded Funds), non-retail schemes (alternative investment funds), undertake portfolio management services or operate as manager to various investment trusts (REIT and InvIT) can do so by seeking a single unified registration from IFSCA.
The detailed eligibility and regulatory requirements for fund managers, retail schemes, non-retail schemes, venture capital schemes, portfolio management services and investment trusts have been prescribed.
Venture Capital Schemes or non-retail schemes soliciting money from accredited investors only shall qualify for a green channel . The requirements on scheme size, number of investors, permissible investments, etc. have been detailed in the draft regulations.
To support various innovations in a controlled way, the following has also been included in the draft regulations:
- Fund Lab: A platform shall be provided to aspirational fund managers to try new strategies in a controlled manner.
- Special purpose vehicle (SPV) as a co-investment structure: Similar to international jurisdictions, fund managers shall be permitted to create SPVs under the main scheme to enable undertake co-investment or leverage along with the Fund/ scheme subject to certain conditions.
- Retail participation in private markets: There has been growing need to facilitate investors at large invest in private markets. Accordingly, it is proposed to facilitate retail close ended schemes to invest in unlisted securities subject to certain conditions.
