The International Financial Services Centres Authority (IFSCA) has issued a key circular—Framework on Stewardship Code in IFSC (F. No. IFSCA-AIF/132/2024-Capital Markets, dated October 23, 2025)—introducing a structured approach to responsible investing within India’s International Financial Services Centre (IFSC), particularly at GIFT City.

Issued under the powers conferred by Sections 12 and 13 of the IFSCA Act, 2019, read with Regulation 146 of the Fund Management Regulations, the framework came into effect immediately upon release.

This circular establishes clear principles for Fund Management Entities (FMEs) and Institutional Investors to act as responsible stewards of the capital they manage—aligning investment decisions with long-term value creation, ethical conduct, and accountability. It seeks to embed sustainability, transparency, and active ownership into fund management practices, fostering a resilient and trustworthy financial ecosystem.

By doing so, IFSCA aims to enhance investor protection, strengthen corporate governance, and align the IFSC with global stewardship standards—positioning GIFT City as a credible, governance-driven investment hub on par with leading international financial centres.

Who This Circular Is For

The circular applies to all FMEs and Institutional Investors, including Alternate Investment Funds (AIFs), Retail Funds (RFs), and other regulated entities operating in the IFSC. These stakeholders—who manage pooled capital on behalf of investors—are expected to go beyond transactional investing and adopt principles of active ownership and long-term engagement with investee companies.

Entities are encouraged (though not mandated) to adopt the IFSCA Stewardship Code or align with an equivalent framework issued by regulators such as SEBI, IRDAI, or PFRDA, or by statutory bodies like ICSI, provided it substantially reflects IFSCA’s principles. However, once an entity adopts a code, the associated disclosure, reporting, and compliance obligations become binding.

Each adopting entity must also communicate the chosen stewardship code to IFSCA and publish it on its website. An FME managing a Fund of Funds may alternatively disclose and publish the underlying fund’s stewardship code.

Why It Matters

In modern finance, good governance and transparency are as critical as performance.

The Stewardship Code will:

• Protect investors through ethical engagement and structured reporting.
• Encourage stronger governance in investee companies.
• Align IFSC practices with international benchmarks.
• Foster long-term value creation and attract global institutional capital.

In essence, the framework reflects IFSCA’s broader vision—to make India’s IFSC a centre of trust, accountability, and responsible financial leadership.

Key Principles of the Stewardship Code Framework

The annexure to the circular outlines seven guiding principles that form the foundation of responsible investing and stewardship within IFSCs. Together, they translate IFSCA’s expectations—of transparency, proportionality, active ownership, and oversight—into actionable governance standards for Fund Management Entities and Institutional Investors.

1. Policy Formulation and Disclosure

Each entity must formulate and publicly disclose a stewardship policy that defines its governance culture, investment philosophy, engagement methods, and escalation approach.

Transparency & Communication:
The policy must be published on the entity’s website, formally communicated to IFSCA, and reviewed periodically. FMEs of Funds of Funds may disclose the underlying fund’s adopted stewardship code.

Flexibility in Adoption:
Entities may adopt the IFSCA framework or an equivalent stewardship code recognized by regulators such as SEBI, IRDAI, PFRDA, or ICSI, provided it aligns with IFSCA’s principles. The framework allows proportionality—letting fund managers tailor their policies to fund size, structure, and jurisdiction.

Training & Periodic Review:
Regular training should reinforce stewardship principles as a living practice, and entities must periodically review the efficacy of and compliance with their stewardship and reporting framework.

2. Monitoring of Investee Companies

Stewardship extends beyond voting—it requires continuous monitoring of investee companies’ strategy, financial performance, governance structures, and ESG practices.

Entities must:

• Track key factors such as capital structure, related-party transactions, board composition, and reputational or regulatory risks.
• Calibrate monitoring intensity based on investment exposure and materiality.
• Ensure engagement remains compliant and avoids misuse of inside information.

This proactive oversight helps safeguard beneficiaries’ interests and promote long-term value creation.

3. Intervention and Escalation

When significant governance, performance, or ethical concerns arise, investors are expected to intervene constructively.

Engagement may include discussions with management, joint action with other investors, or formal escalation such as shareholder resolutions.

Policies should define clear triggers for escalation, including persistent underperformance, governance failures, or ESG breaches. Each intervention must be documented—capturing concerns raised, company responses, and outcomes achieved—to ensure accountability and transparency.

4. Conflict of Interest Policy

FMEs and institutional investors must maintain a robust policy to identify, manage, and disclose potential conflicts that may compromise decision-making.

This includes:

• Conflicts arising from dual roles, affiliate relationships, or commercial dependencies.
• Procedures for prompt disclosure of material conflicts to clients or beneficiaries.
• Periodic reviews to ensure conflict-management mechanisms remain effective.

Such transparency safeguards investor trust and reinforces fiduciary accountability.

5. Voting Policy

Voting is one of the most direct tools of stewardship. Every entity must adopt a formal voting policy consistent with its investment objectives and fiduciary obligations.

Key expectations include:

• Exercising voting rights ethically and transparently, in the best interest of beneficiaries.
• Maintaining detailed voting records—including votes cast, abstentions, and rationale.
• Ensuring that proxy or advisory support complements but does not replace investor responsibility.
• Reviewing voting outcomes periodically to assess alignment with policy intent.

Through responsible voting, investors move from passive ownership to active, governance-driven participation.

6. Collaboration

Recognizing that collective influence enhances governance outcomes, the framework encourages constructive collaboration among institutional investors.

Collaboration may occur through investor forums, stewardship networks, or coordinated engagement on ESG or governance matters. Such actions must remain transparent, well-documented, and compliant with laws and confidentiality obligations.

Policies should define when collaboration is appropriate and ensure it supports—not replaces—individual accountability. Entities are also encouraged to strengthen internal capacity through shared best practices and stewardship training.

7. Reporting and Disclosure

Transparency is the backbone of stewardship. Entities must report periodically (at least annually) on how they have applied stewardship principles and the results achieved.

Reports should include:

• A summary of engagements, voting decisions, interventions, and collaboration outcomes.
• Explanations for any deviations from the policy and corrective measures taken.
• Metrics or qualitative assessments demonstrating effectiveness, not just activity.
• Confirmation of periodic review of stewardship efficacy and compliance.

Regular reporting reinforces investor confidence and positions GIFT City as a jurisdiction committed to ethical, globally benchmarked investment conduct.

In Conclusion

The IFSCA Stewardship Code Framework (2025) marks a maturity milestone in India’s financial regulation. It redefines the role of fund managers and institutional investors—from capital allocators to guardians of responsible capitalism—balancing profitability with prudence and influence with accountability.

For every fund operating within the IFSC, this framework is an opportunity to embed stewardship at the core of investment strategy—ensuring that capital is deployed not only for returns, but also for resilience, governance, and long-term trust in India’s global financial ecosystem.