IFSCA's Stewardship Code Framework in GIFT City Enhancing Responsible Investment and Corporate Governance

Background: GIFT City’s Next Step Toward Responsible Finance

GIFT City, India’s flagship International Financial Services Centre (IFSC), is rapidly emerging as a global financial hub. As the number of fund managers, institutional investors, and financial firms continues to grow, so does the need for strong governance, transparency, and accountability in investment management.

To address this, the International Financial Services Centres Authority (IFSCA) issued a Circular on the Framework for Stewardship Code in IFSC on October 23, 2025, under the Fund Management Regulations, 2025.

This new framework introduces a formal Stewardship Code — a set of principles guiding fund managers and institutional investors to act as responsible stewards of the capital they manage. It aligns GIFT IFSC with international best practices adopted in financial hubs such as Singapore, London, and Hong Kong.

What Is the IFSCA Stewardship Code?

The Stewardship Code Framework defines how fund management entities and institutional investors should engage with companies they invest in, manage conflicts of interest, vote responsibly, and disclose actions transparently.

The goal is to ensure that every investor and fund manager operating in GIFT City acts as a long-term steward of capital, not merely as a market participant focused on short-term profits.

Key Principles of the Stewardship Code

1. Policy Formulation and Disclosure

Each fund management entity must develop a clear stewardship policy describing how it will fulfill its responsibilities as a shareholder and investor.This policy must be disclosed on its website and reviewed periodically to ensure it reflects the firm’s governance philosophy and compliance with IFSCA norms.

2. Monitoring of Investee Companies

Fund managers are expected to actively monitor the companies they invest in. This includes reviewing financial performance, governance practices, ESG parameters, and management quality.Regular engagement with company management helps ensure investments align with long-term goals and sustainable value creation.

3. Intervention and Escalation

When governance or performance issues arise, fund managers must intervene constructively. Actions may include discussions with management, collaborative engagement with other investors, or, if needed, voting against resolutions.All interventions must be well-documented and reported transparently.

4. Managing Conflicts of Interest

Every entity must have a conflict-of-interest policy to prevent, identify, and disclose any conflicts that might arise between its own interests and those of its investors.This ensures that fund managers always act in the best interest of their clients and maintain trust.

5. Voting Responsibilities

Voting is a critical stewardship tool. Fund managers should exercise voting rights actively and responsibly, with a clear rationale behind each decision.They are required to maintain detailed records and publicly disclose their voting outcomes at regular intervals.

6. Collaboration Among Investors

IFSCA encourages fund managers and institutional investors to collaborate on shared governance issues. Working collectively can enhance influence and lead to better governance practices across investee companies while maintaining transparency and compliance.

7. Disclosure and Reporting

Transparency is the foundation of stewardship. Fund managers and institutional investors must publicly disclose how they implement their stewardship responsibilities.Disclosures should be published at least once a year and must explain any deviation from stated policies or commitments.

Impact of the Stewardship Code on GIFT City Stakeholders

Impact on Investors

For investors, the Stewardship Code builds trust and assurance. They can be confident that fund managers are closely monitoring the companies they invest in and making informed, responsible decisions.The Code promotes long-term value creation, stronger corporate governance, and better protection of investor interests.

Impact on Fund Managers and Financial Service Providers

Fund Management Entities (FMEs), Alternative Investment Funds (AIFs), and Retail Schemes operating in GIFT City must now align their internal policies with the Stewardship Code.This alignment not only enhances compliance but also boosts credibility with global investors and sovereign wealth funds seeking ESG-aligned, transparent investment partners.By adopting these practices, fund managers demonstrate accountability, integrity, and responsible investment leadership within GIFT IFSC.

Impact on the GIFT City Ecosystem

The introduction of the Stewardship Code strengthens GIFT City’s reputation as a globally trusted financial jurisdiction. It establishes a regulatory culture that prioritizes ethics, transparency, and long-term responsibility.This move will attract more foreign fund managers, institutional investors, and ESG-driven financial firms, reinforcing GIFT City’s position as India’s international financial gateway.

Strategic Takeaway

The IFSCA Stewardship Code is more than a compliance mandate—it is a transformative step toward embedding responsible investing, sustainability, and transparency into GIFT City’s financial DNA.

For investors, it enhances protection and confidence. For fund managers, it sets higher governance standards. For GIFT City, it elevates its global standing as a mature, ethical, and forward-looking financial ecosystem.

By adopting this framework, GIFT IFSC moves closer to its goal of being a world-class financial hub governed by integrity and trust.

Disclaimer

This article provides a simplified overview of the IFSCA Circular on the Framework for Stewardship Code in IFSC, dated October 23, 2025.It is intended for informational and educational purposes only and does not constitute legal, financial, or investment advice.Readers are advised to refer to the official circular on www.ifsca.gov.in and seek professional guidance before making any investment or compliance decision.