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Financial entities in IFSC: A primer

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– Parth Ved, Executive | parth@vinodkothari.com

Table of contents

BackgroundApplicability of Domestic Regulatory framework Regulatory framework in IFSC
What is IFSC?Companies Act, 2013IFSCA (Finance Company) Regulations, 2021
Purpose of setting up an IFSC Foreign Exchange Management Act, 1999Specific Frameworks for Aircraft Leasing and Ship Leasing
Who regulates IFSC?Income tax act, 1961IFSCA (Fund Management) Regulations, 2022
Is IFSC and GIFT City the same? Goods and Services TaxIFSCA (Banking) Regulations, 2020
Permission for setting up an entity in IFSCStamp dutyClosing remarks
Securities lawRelevant Links
Banking law

Background

Flow of funds, just like a river, not only enriches its destination but also benefits all the stops it passes through. Having a financial hub, a stopover which enables routing billions and billions of global funds on a daily basis can definitely prove resourceful. London, New York, Singapore are some of the globally recognised financial centres, and needless to say these locations are at the forefront of financial development. India too has tried to tap into this with the setting up of GIFT-IFSC in Gujarat, and has tried to position itself as the next big global hub for financial transactions.

Through this write-up, the author tries to explain the concept of International Financial Services Centre and the applicability of domestic regulatory framework on entities set up therein.

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Creating regulatory eco-system for SPACs in India

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– Ajay Kumar KV, Manager & Himanshu Dubey, Executive

[corplaw@vinodothari.com]

From a little-known word and a preserve of a select few finance professionals, the term Special Purpose Acquisition Companies (SPACs) is today a buzzword. The regulators across the globe are taking necessary actions to enable SPACs to raise money from investors – jurisdictions like the US, UK and Malaysia lead from the front. Having a sound regulatory framework is important because if investors are keen towards SPACs, and the regulators do not enable it, it is quite likely that the country will not be a friendly destination for SPACs. Hence, India’s securities regulator SEBI has recently constituted an Expert Group for examining the feasibility of SPACs in India, and the International Financial Services Center Authority (IFSCA) has issued IFSCA (Issuance and Listing of Securities) Regulations, 2021[1] which provides a regulatory framework for listing of SPACs within its jurisdiction.

In this write up, the authors take a look at the global legislative measures, and also outline the various changes in the regulations that may be needed in India to enable to make India a SPAC-friendly jurisdiction.

Contents

Introduction. 2

Important regulatory concerns. 3

  1. Sponsor’s contribution. 4
  2. Safekeeping of IPO proceeds. 4
  3. Acquisition Process. 4
  4. Managing conflict of interest 5
  5. Exit mechanism… 5
  6. Speculation on shares. 5
  7. Celebrity endorsements. 6

Regulatory framework in India. 6

Issues under the Act 6

Regulatory framework for SPACs as per the IFSCA (Issuance and Listing of Securities) Regulations, 2021. 9

Exploring some scenarios and the concomitant regulatory ramifications. 13

Regulatory framework on SPACs abroad. 16

  1. Malaysia. 16
  2. Canada. 18
  3. United Kingdom (UK). 19
  4. United States of America (USA). 21

Conclusion. 24

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