IFSC Schemes Governance: Complete Guide to IFSCA’s Fiduciary Segregation Circular

The International Financial Services Centres Authority has issued a significant governance circular dated April 10, 2026 (Circular No. IFSCA-IF-10PR/7/2024-Capital Markets/10042026). This circular reshapes how Fund Management Entities in International Financial Services Centres must structure oversight of their schemes, with a central focus on clear separation of fiduciary roles from service provision.

This article provides a structured, practitioner-focused explanation of the circular, its legal basis, and its practical consequences for Fund Management Entities (FMEs), schemes, and investors operating within IFSCs.

1. Regulatory Context and Objective

The circular is anchored in the following provisions:

  • Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019; and
  • Regulation 146 of the International Financial Services Centres Authority (Fund Management) Regulations, 2025 (“FM Regulations”).

These powers enable the Authority to:

  • Issue directions to regulated entities;
  • Frame and clarify compliance requirements; and
  • Strengthen governance frameworks across fund management structures in IFSCs.

The circular takes immediate effect from April 10, 2026 and applies to all Fund Management Entities in International Financial Services Centres.

1.2 Policy intent

The circular addresses a core governance concern: fiduciaries must be independent and free from commercial conflicts of interest. The Authority has clearly identified that when a fiduciary to a scheme also provides other critical services—such as fund administration, valuation, audit, or lending—to the same scheme, neutrality of judgment may be compromised.

By mandating segregation of these roles, the circular aims to:

  • Enhance investor protection;
  • Promote transparent and conflict-free decision-making;
  • Align IFSC practice with global best standards in fund governance; and
  • Create a robust and predictable compliance environment for FMEs.

2. Fiduciary Framework Under the FM Regulations

2.1 Appointment of fiduciaries under regulation 17(2)

The circular draws first from sub-regulation (2) of regulation 17 of the International Financial Services Centres Authority (Fund Management) Regulations, 2025. This provision requires each Fund Management Entity to appoint appropriate fiduciaries for every scheme, depending on the legal form in which the scheme is set up.

Under regulation 17(2), fiduciaries include:

  • Trustees:

    • Applicable where the scheme has been constituted as a trust.

  • Board of Directors:

    • Applicable where the scheme has been organised as a company.

  • Designated Partners:

    • Applicable where the scheme operates as a Limited Liability Partnership (LLP).

These fiduciaries occupy a position of responsibility towards the scheme and its investors, and their independence is crucial for reliable oversight.

2.2 Standards of conduct under regulation 17(5) and Third Schedule

The circular also refers to regulation 17(5) of the FM Regulations. This provision binds fiduciaries to the Code of Conduct and obligations laid down in the Third Schedule.

The Third Schedule, among other requirements, mandates that fiduciaries must:

  • Maintain high standards of service at all times;
  • Exercise due diligence in the discharge of their functions;
  • Take proper care in protecting the interests of the scheme and its investors; and
  • Apply independent professional judgment without undue influence.