OVERVIEW:

• On October 4, 2024, the International Financial Service Centres Authority (IFSCA) issued guidelines concerning the use of office space or manpower by financial companies involved in ship leasing activities within the IFSC.

• This development comes in response to a notification from the Ministry of Commerce and Industry that amended the Special Economic Zones (SEZ) Rules to incorporate ship leasing.

• The purpose of this circular is to facilitate operations for finance companies in the ship leasing sector while ensuring adherence to the regulatory framework.

REVISED RULE 21B OF SEZ RULES:

• The updated Rules 21B now states that a unit authorized to undertake aircraft or ship leasing activities may utilize office space or manpower from another unit in the IFSC.

• Such arrangements require approval from the International Financial Services Centres Authority (IFSCA).

• The amendment aims to facilitate efficient operational practices within the IFSC.

• By sharing resources, entities can enhance productivity and reduce overhead costs.

GUIDELINES FOR SHIP LESSORS:

• These guidelines specifically address ship lessors registered with the IFSCA who are seeking to share resources with another entity aiming to register for ship leasing acivities.

• The applicant entity (existing ship lessor) is eligible to apply for resources sharing under the conditions that the proposed entity qualifies as a ‘group entity’ related to either the applicant entity or its parent entity.

• A ‘Group Entity’ means an arrangement involving two or more entities related to each other through any of the relationships viz. Subsidiaries, Joint Ventures, Associates, related parties, common Brand Names and investment in equity shares (of 20% and above).

APPLICATION PROCESS:

• The applicant entity must complete and submit a duly filled application in accordance with the guidelines.

• Along with the application, the applicant must pay a one-time fee of USD 2500 at the time of application sumission.

• Applicants for resources sharing must be susbmitted before the incorporation of he proposed entity in the IFSC.

• After obtaining approval for resource sharing, the proposed entity is required to complete the incorporation process and the entity must submit an application for registration as a ship lessor to the IFSCA.

• The application for registeration must be completed  within six months from the date the approval for resource sharing is granted.

CONCLUSION:

• These guidelines present a significant oppotunity for finance companies and units engaged in ship leasing within the IFSC to optimize operations through resource sharing.

• By enabling entities to share office space and manpower, the IFSCA promotes cost efficiency, enhances collaboration, and fosters innovation in the ship leasing sector.

• This approach not only strengthens the financial ecosystem but also positions the IFSC as a competitive hub for  global finance, attracting  more participants and investments.

• Overall, the implementation of these guidelines is expected to drive growth and operational  excellence in the indusrty.