IFSCA Third Party Fund Management Rules 2026 Explained for Global Fund Managers and Businesses in GIFT City

India’s International Financial Services Centre at GIFT City continues to position itself as a serious global fund management hub. A recent circular issued by the International Financial Services Centres Authority IFSCA brings important procedural clarity for Fund Management Entities that offer Third Party Fund Management Services.

This update is especially relevant for global fund managers, investment platforms, startup fund sponsors, and cross-border asset management firms looking to structure funds through GIFT City. The circular focuses on how schemes must be filed when an authorised Fund Management Entity launches a fund on behalf of a third-party manager.

Understanding these new requirements is critical. They directly affect how quickly funds can be launched, how compliance is assessed, and how credibility is demonstrated to regulators and investors.

Regulatory Background

The circular is issued under the IFSCA Fund Management Regulations 2025, specifically Part D of Chapter VI, which governs Third Party Fund Management Services. These provisions allow a registered Fund Management Entity in GIFT City to manage and launch schemes for another fund manager based in a different jurisdiction.

This structure is widely used by:

• Overseas fund managers entering India-linked opportunities

• Global asset managers are testing India strategies without building a full local presence

• Investment platforms partnering with specialised offshore managers

The latest circular does not change the core framework but clarifies the procedure and documentation required when filing scheme applications under such arrangements.

Streamlined Filing Process

IFSCA has confirmed that registered Fund Management Entities must continue using the filing format and documentation already prescribed under an earlier circular focused on ease of doing business. This ensures continuity and avoids creating an entirely new process.

However, because third-party fund management involves an additional overseas or external manager, the Authority now requires extra disclosures and supporting documents to strengthen regulatory oversight.

Business Impact: This reduces ambiguity. Fund managers and service providers can now build internal compliance checklists and avoid delays caused by incomplete applications. For startups building fund platforms, this clarity makes operational planning more predictable.

Key Additional Information Required

IFSCA has specified a detailed list of information that must be submitted when a scheme is filed under a third-party fund management arrangement. Each of these has practical implications for businesses.

1. Legal Identity and Regulatory Status of the Third-Party Manager

Applicants must provide the full legal name, registered office address, and proof of registration or licence of the third-party fund manager in its home jurisdiction.

Why this matters for businesses: This ensures only properly regulated managers can access GIFT City structures. For investors, this adds comfort. For fund sponsors, it means due diligence on partners becomes non-negotiable before structuring a scheme.

2. Ultimate Beneficial Ownership Disclosure

A look-through chart showing the Ultimate Beneficial Owners of the third-party fund manager must be submitted.

Business impact: Transparency expectations are now very clear. Complex holding structures must be mapped in advance. Startups and new fund managers using layered ownership models will need legal and compliance support early in the structuring phase.

3. Board and Key Management Profiles

Details of board members, designated partners, and key managerial personnel of the third-party manager are required.

Why this is important: Regulators are evaluating the competence and track record of the people behind the fund. This raises the bar for governance. Businesses planning to launch niche or first-time strategies must ensure their leadership team has credible experience.

4. Assets Under Management and Track Record

The application must include complete AUM details and past investment strategies of the third-party manager, particularly those similar to the proposed scheme.

Impact on proposed businesses: New managers without a track record may face greater scrutiny. Established managers gain an advantage, as proven performance supports faster regulatory comfort. For startups, partnering with an experienced co-manager can strengthen applications.

5. Compliance Declaration Under FM Regulations

A Declaration and Undertaking confirming compliance with obligations and requirements under specific provisions of the Fund Management Regulations must be furnished.

Business relevance: This places direct accountability on the third-party manager. Legal teams must carefully review regulatory obligations before signing. It also signals to investors that compliance responsibility is clearly acknowledged at the managerial level.

6. Agreement Between FME and Third-Party Manager

IFSCA requires the document evidencing the fund management arrangement between the registered FME and the third-party manager.

Practical implication: Commercial agreements must now be regulator-ready, not just commercially sound. Clauses on roles, responsibilities, reporting, and liability must be clearly defined. Poorly drafted agreements could delay approvals.

7. Deal Execution, Conflicts of Interest, and Remuneration

An outline of the deal execution processes, conflict of interest disclosures, and remuneration policies of the third-party manager must be provided.

Why this is critical: This protects investors. Businesses must demonstrate fair allocation of opportunities and transparent fee structures. Fund managers with opaque incentive models may need to restructure policies to align with regulatory expectations.

8. Key Management Personnel Changes

Details related to the appointment or change of Key Managerial Personnel must be disclosed as per the regulations and related circulars.

Business impact: Leadership changes can affect regulatory comfort. Firms must establish internal reporting systems to ensure timely updates to the Authority. This promotes governance stability.

Digital Filing Through the IFSCA Single Window System

All scheme applications under this framework must be filed through the IFSCA Single Window IT System.

What this means for businesses: Digital filing increases efficiency but also demands accurate documentation in prescribed formats. Compliance teams should maintain organised digital records to avoid rejection or resubmission cycles.

Legal Authority and Immediate Effect

The circular has been issued under the powers granted by the IFSCA Act 2019 and relevant regulations, and it comes into force with immediate effect.

Implication: Ongoing or upcoming fund launches under third-party arrangements must align with these requirements right away. Delays in updating documentation could slow time-to-market.

Conclusion

The latest IFSCA clarification strengthens GIFT City’s position as a credible and globally aligned fund management jurisdiction. By demanding deeper transparency on ownership, governance, track record, and operational policies of third-party fund managers, the Authority is building investor confidence while maintaining ease of doing business.

For global asset managers, this creates a clear entry pathway into India-linked strategies through GIFT City. For startups and new fund platforms, it highlights the importance of strong governance, experienced leadership, and well-documented partnerships.

Businesses that prepare early, align documentation with regulatory expectations, and build transparent fund structures will be better placed to launch schemes efficiently and attract institutional capital through GIFT City’s growing financial ecosystem.

Planning to Launch or Manage a Third-Party Fund in GIFT City?

IFSCA’s updated third-party fund management requirements raise the bar on disclosures, governance, documentation, and regulatory readiness. Getting it right early can mean the difference between a smooth fund launch and costly delays.

GIFT CFO supports global fund managers, sponsors, and investment platforms with:

• Structuring third-party fund management arrangements under IFSCA regulations

• Preparing scheme filing documentation and Single Window submissions

• Aligning fund agreements, governance frameworks, and compliance declarations

• Supporting ongoing regulatory reporting and investor-ready disclosures

Whether you’re an overseas manager entering GIFT City or a platform scaling multiple fund launches, we help you move forward with speed, clarity, and regulatory confidence.

Connect with GIFT CFO to structure, file, and scale your IFSC fund the right way.

Call: +919726372715 Email: info@giftcfo.com

Consult with the GIFT CFO to build your global financial presence from India.