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Informist, Wednesday, Jun. 3, 2026

NEW DELHI – The government has floated the draft International Financial Services Centres Authority (Amendment) Bill, 2026 for governing Variable Capital Companies. "The governance matrix of Variable Capital Companies shall predominantly include, management shareholders, board of directors, fund management entity, fund manager, and compliance officer," a finance ministry notice said.

The board of directors of such companies shall pass a resolution to appoint a fund management entity as well as the fund manager. The fund management entity shall be registered with IFSCA as per extant legal framework, it said. "The fund manager shall be designated as key managerial personnel for the Variable Capital Companies for clear allocation of responsibility. The fund manager along with the fund management entity shall be collectively responsible for carrying the fund management activities for a Variable Capital Company and shall be accountable to the members and the board of directors of Variable Capital Companies," the circular said.

The tweaked norms will mandate a common board of directors at the Variable Capital Companies level for all sub-funds and the directors shall be appointed by the management shareholders. "The board of directors shall be akin to fiduciaries under the extant fund management regime in the IFSC," the notice said. These companies will also be allowed to enter into arrangements with their creditors or members. "These arrangements are under the oversight of the National Company Law Tribunal. In contrast, merger and amalgamation between two or more sub-funds or a holding VCC and its wholly-owned subsidiary shall be under the supervision of IFSCA."  End

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

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