The Journey towards obtaining FME Registration from IFSCA: Understanding the Eligibility Criteria

For any entity desiring to embark on the journey of acquiring registration as a Fund Management Entity (FME) from the International Financial Services Centres Authority (IFSCA), understanding and meeting the eligibility conditions, as stated in Chapter II of the Regulations, is of paramount importance. Along this journey, the applicant will encounter essential criteria that they must satisfy. These include:

• A track record and reputation of fairness
• Staffing and competency requirements
• Net worth requirement
• Fit and proper requirement
• Infrastructure requirements

Let’s now walk through each of these crucial stages of the journey in detail

Stage 1: Establishing a Track Record and Reputation of Fairness

This crucial first step on the journey mandates the applicant to demonstrate a robust track record and uphold a general reputation for fairness and integrity in all its business transactions. In essence, the applicant must adhere to a stringent set of ethical standards and ensure they maintain fairness in all dealings.

Mapping the Path for Registered FME (Retail)

For a Registered FME (Retail) or its holding company, the path to demonstrating a sound track record entails having a minimum experience of five years in managing Assets under Management (AUM) of at least USD 200 million, involving more than twenty-five thousand investors.

Alternatively, at least one controlling individual of the FME should have over twenty-five percent shareholding in the FME while also conducting business in financial services for not less than five years. Notably, the IFSCA may consider alternative criteria to advance fintech companies with unique and innovative ideas, thereby furthering the market’s development.

Charting the Route for Registered FME (Non-Retail) and Authorised FME

If the applicant falls under the Registered FME (Non-Retail) or Authorised FME category, it must exhibit a track record by employing personnel with relevant experience as detailed in the regulations.

Stage 2: Navigating Staffing and Competency Requirements

At this stage, the prospective FME aligns its staffing plan to meet the regulatory stipulations under Regulation 7. The categories of FME, their corresponding requirements, and pathways are as follows:

Pathway for Authorised FME

For this category, a Key Managerial Personnel (KMP) needs to be designated as the “Principal Officer”, bearing the responsibility for overlooking all FME activities, including fund management, risk management, and compliance.

Route for Registered FME (Non-Retail)

Apart from designating a Principal Officer, this category requires the appointing of an additional KMP, designated as the “Compliance and Risk Manager”, who will be solely responsible for ensuring compliance with the regulations and managing the risks at the FME efficiently.

For the Registered FME (Retail) category too, along with the Principal Officer and the Compliance and Risk Manager, an additional KMP is assigned with the critical task of fund management.

Professional Qualifications & Experience

All applicants are required to delegate roles to those who hold either a professional qualification, a post-graduate degree or diploma (of at least 2 years) in relevant fields, or possess a certification from a recognised institution. In terms of experience, a minimum of five years in related activities in the securities market or financial products is required. Depending on its operations and activities, the FME might need to hire more personnel, as deemed necessary.

Stage 3: Fulfilling the Net Worth Requirement

Depending on the specific FME registration category, the applicant is mandated to meet the stipulated net worth requirements at all times, specified in the Second Schedule of the Regulations (or as directed by the IFSCA).

For FME’s operating in a branch structure within IFSC, the specified minimum net worth requirement can be maintained at the parent level, provided the parent entity ensures adequate funds for the branch’s day-to-day operations.

Stage 4: Meeting the Fit and Proper Requirement

Regulation 9 mandates the applicant, its Principal Officer(s), directors, partners, KMPs, and controlling shareholders, to comply with the fitting and proper person criteria, which must be maintained at all times.

Stage 5: Infrastructure Requirement

The final stage requires the FME to ensure the availability of adequate infrastructure–including office space, equipment, communication facilities, and manpower–to successfully carry out its activities. The infrastructure must be proportional to the size of its operations in the IFSC, and the office must be secure, dedicated, and accessible only to authorised personnel.

Understanding the route to FME registration is critical for any entity eager to venture into and succeed in the realm of fund management under the purview of the IFSCA. While the journey may seem arduous, compliance with these eligibility conditions will ensure long-term success and legality of operations.

The road to obtaining the FME registration from the IFSCA is a marathon, not a sprint–it demands meticulous planning, continuous effort, steadfast integrity, and unwavering commitment to meet and maintain the stated conditions.

Simplifying the Procedure to Obtain FME Registration in IFSC

Obtaining a certificate of registration as a Fund Management Entity (FME) in the International Financial Services Centres Authority (IFSC) might seem complex. But once understood, the process becomes straightforward. In this article, we aim to provide you with clarity and concise information on attaining this certification.

Navigating the Certification Journey

An entity aspiring to become an FME in IFSC must meticulously follow a set of procedures. Integral to this journey is the submission of an application form. You must present this form specifically in the format and manner as commanded in the First Schedule of the Regulations.

Your Question Answered: Can a FME Change its Category of Registration?

If an entity registered as an FME under a certain category intends to change that category, there might be some roadblocks. Specifically, an FME cannot change its registered category. However, exceptions do exist and depend on the approval from the Authority. Thus, tread carefully in this territory and understand that changing the registered category isn’t a decision that an FME can make independently.

Delving into the Certificate’s Validity Period

How long is the certificate valid, you ask? The truth is, this period varies. However, to offer some guidance, the IFSCA specifies the validity period for each certificate awarded. It’s important also to be aware that several scenarios could affect this.

These include suspensions or cancellations by the IFSCA. In some instances, an FME might decide to surrender the certificate, after which the IFSCA must acknowledge it.

In conclusion, the journey to obtaining the FME registration in IFSC appears complex but is more straightforward when understood systematically. Any entity set on this path must remember to adhere strictly to each procedure and be mindful to meet all requirements and conditions. Thus, they’ll ensure they remain in good standing with the IFSCA and can operate successfully within its guidelines.