Introduction : The International Financial Services Centres Authority (IFSCA) has issued a crucial circular, F. No 496/ IFSCA/FC/SLF/2024-25/01, on April 02, 2024. Addressed to all Finance Companies and Finance Units within the International Financial Services Centre (IFSC), this circular aims to provide clarification regarding permissible activities outlined under the ‘Framework for Ship Leasing’ (SL Framework).
Detailed Analysis
The circular references the IFSCA’s Finance Company Regulations of 2021 and the SL Framework, initially issued via Circular No. 496/IFSCA/FC/SFL/2022-23/001 on August 16, 2022, and subsequently amended. According to the SL Framework, a lessor holding a Certificate of Registration under the FC Regulations can engage in permissible activities specified in sub-clause E and H of clause 3 of the SL Framework.
However, the clarification points out that a lessor can only undertake activities specified in paragraph (ii) of sub-clause E of clause 3 of the SL Framework if they possess absolute or leasehold rights over the ship or ocean vessel. This delineation aims to ensure compliance and precision in the operations of lessors within IFSCs.
Conclusion : Issued under the authority vested by the International Financial Services Centres Authority Act of 2019, this circular serves to enhance regulatory clarity and transparency within IFSCs. Effective immediately, it underscores the importance of adherence to prescribed regulations while conducting ship leasing activities. Stakeholders are encouraged to refer to the circular available on the IFSCA website for comprehensive understanding and compliance.
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INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY
Circular No. F. No 496/ IFSCA/FC/SLF/2024-25/01 Dated: April 02, 2024
To,
All Finance Company/ Finance Unit in the International Financial Services Centre (IFSC)
Subject: Clarification in relation to the permissible activities specified under the ‘Framework for Ship Leasing’
Reference is drawn to International Financial Services Centres Authority (Finance Company) Regulations, 2021 (‘FC Regulations’) and the ‘Framework for Ship Leasing’ (‘SL Framework’) issued thereunder vide Circular No. 496/IFSCA/FC/SFL/2022-23/001 dated August 16, 2022, as amended from time to time.
2. As per the said SL Framework, a lessor, which has obtained a Certificate of Registration (CoR) under regulation 3 of the FC Regulations, may undertake the permissible activities specified in sub-clause E and H of clause 3 of the SL Framework.
3. In furtherance of the above, it is hereby clarified that a lessor may undertake the activities specified at paragraph (ii) of sub-clause E of clause 3 of the SL Framework, only if such lessor has absolute or lease hold right over the ship/ocean vessel.
4. This Circular is issued in exercise of powers conferred by section 12 of the International Financial Services Centres Authority Act, 2019, read with regulation 10 of the FC Regulations and sub-clause Q of clause 3 of the SL Framework, and come into force with immediate effect.
5. A copy of this Circular is available on the website of the Authority at ifsca.gov.in/circular.
Yours faithfully,
Riddhi Bhandari
(General Manager)
[email protected]
