Public comments on proposed IFSCA (Finance Company) (Amendment) Regulations, 2026

Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 No Regulati Comments/Suggestion/Proposed Detailed rationale Other supporting on no amendment information / global best practices 1. General It is suggested that clarity may be Trustees act in a fiduciary and This approach is consistent provided that compliance with oversight capacity and do not have with the established trustee minimum owned fund shall be the operational control over the capital framework, wherein trustees responsibility of the SPV / sponsor and structuring or funding decisions of are not responsible for shall not impose additional capital SPVs. Clear allocation of responsibility day-to-day financial adequacy monitoring obligations on ensures that accountability for capital management or capitalization the trustee beyond supervisory adequacy remains with the SPV and its decisions, and aligns with oversight. sponsors, while trustees continue to principles of proportional perform their supervisory role without regulation and role clarity under assuming operational or financial existing regulatory regimes. management responsibilities. 2. General Minimum capital requirement for Ireland, Singapore and ADGM require Nil SPVs: The proposed minimum is only clear substance guidelines. share capital under Companies Act (₹1 lakh / USD equivalent). (i)Observations & Questions: Is this sufficient for economic substance and global credibility? (ii)Will there be: (a) Safe harbour substance thresholds? (b) Minimum employee/director presence rules? Page 1 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 3. Schedule Exemption of Regulation 4 & 8 for Nil Nil I SPVs – Request for clarity: (i)These exemptions relate to: Net Owned Fund (NOF) | Prudential regulations Query: Should SPVs with large asset sizes (USD 100M+aircraft) be subject to enhanced prudential requirements? Or is the intent that all risk sits with the lessor/financier, not the SPV? 4. 2(o) Proposed definition: The definition is formulated to provide • The definition mirrors the "Trust and Company Service Provider a formal, regulated "institutional global hubs thereby formally backbone" that manages the fiduciary (TCSP)" means a body corporate introducing the market to and administrative needs of Special whose main objects is to provide Trust IFSC. Purpose Vehicles (SPVs) in the aircraft and Company Service Provider • Clear demarcation between leasing sector. By aligning with global services to Special Purpose Vehicle hubs like Ireland and Singapore, this the roles of SPV and the (SPV) for providing ancillary and framework ensures high standards TCSP. By allowing TCSPs to fiduciary services including entity of governance and compliance while handle the fiduciary services, formation, registered office provision, reducing the reliance on offshore SPVs can handle the jurisdictions for leasing structures. This corporate administration, compliance financing and leasing would ensure operational flexibility support and nominee and trustees aspects. without diluting regulatory oversight services wherever required in relation Definition allows direct IFSCA to the leasing activity under the supervision thereby attracting International Financial Services international and global Centres Authority (TechFin and players. Ancillary Services) Regulations, 2025. 5. General In our view, the core issue of Nil Nil bankruptcy remoteness of the SPV still remains to be addressed. Page 2 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 The TCSP may hold shares of the SPV as a trustee for and on behalf of either a charitable trust or the Investor Education and Protection Fund to be set up under the IFSCA statutes. If the beneficiary is any for-profit vehicle, or if the shareholder is a for- profit vehicle directly holding for its own behalf and not in trust for a not-for- profit, the issue of bankruptcy remoteness does not get addressed. The key roadblock to a not-for-profit being a beneficiary was also stemming from KYC requirements for such no- for-profit and our original suggestion to have something akin to a statutory fund being a beneficiary may be a better option. 6. 2(o) “Trust and Company Service Provider Nil Nil (TCSP) means an entity authorized to provide Trust and Company Service Provider services for leasing or financing activity under the International Financial Services Centres Authority (TechFin and Ancillary Services) Regulations, 2025.” 7. Regulati (i)From the proposed definition of the Structure of the SPVs In Ireland the most commonly on 2 SPV it appears that the form of an SPV used company type for aircraft (Definitio can only be a company to be The present proposed regulations owning entities is a Designated n of incorporated under the Companies restrict the SPVs structure to a Activity Company (DAC), a Special Act, 2013. company to be incorporated under the form of private limited company Purpose Companies Act, 2013. that is permitted to have its Vehicle) Under the Companies Act, one can securities admitted to trading or incorporate public company, private In aircraft financing transactions, the listed on any market. company and a one-person company. SPV structures used commonly are Page 3 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 subsidiary companies, orphan SPVs Aviation SPV structures Under Indian law, SPVs can be and limited partnerships. typically fall into two categories: incorporated in the form of a company, on-balance sheet and off- limited liability partnership and balance sheet. partnership. Bankruptcy remoteness/ orphan An on-balance sheet SPV is a IFSC Authority to clarify if the intention SPVs wholly-owned subsidiary of the is to allow only a company structure for parent company, with its assets SPVs. If so, would one person The proposed regulations do not and liabilities consolidated into company be allowed to be provide requirements for an SPV to be the parent’s financial incorporated as an SPV. bankruptcy remote or orphan SPV. statements. (ii)Requirements of bankruptcy The basic requirements for bankruptcy An off-balance sheet SPV, remote/ orphan SPV: remote or orphan SPV are as under: often referred to as an orphan SPV, is structured to be legally The proposed regulations are silent on • The SPV must be an independent independent, with its shares the requirements/ prerequisite of entity separate from its originator. held by charitable trust. This bankruptcy remoteness of the SPVs/ • The investors should solely with no creates a bankruptcy-remote orphan SPVs. This needs to be recourse to the originator, connect vehicle that isolates risk, considered by the IFSC Authority as to with the SPV for payment of interest enhances tax efficiency and how SPVs will be structured so that the and principal on their securities. facilitates cross-border leasing bankruptcy remoteness point is • Should have independent directors, arrangements. addressed. Without this clarity, the which would in turn reduce the lenders might not feel comfortable in likelihood of the board seeking to The rating agencies in a financing assets to be held by the commence voluntary insolvency securitization transaction, SPVs. proceedings. would expect the following for • Requirement of investors approval an SPV (from a bankruptcy and from rating agencies for any remoteness perspective): change in the SPVs originating documents. • The SPV should be for • Properly structuring the SPV to ‘single-purpose’. ensure non-inclusion of its financial • Incur no additional debt assets in the bankruptcy estate. (beyond that sized into the rating and necessary for routine business purposes, such as trade debt and Page 4 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 ordinary working-capital facilities to pre-stated levels). • Not merge or consolidate with a lower-rated entity. • Not dissolve. Have an independent director. 8. Regulati (i)The proposed permissible activities Nil Nil ons 3 & 4 under the amended regulations for the (permissi SPV is aircraft leasing and financing. ble activities) The regulation should further clarify that the leasing and financing would include Aircraft Lease (as defined under the principal regulations. The SPVs should be allowed to undertake all the aircraft related transactions such as aircraft sale and purchase, leasing, financing, securitization (asset backed securitization), novations, title transfer etc. Limiting the permissible activities for the SPVs to aircraft leasing and financing might defeat the purpose and objective these amendments. (ii)Also, IFSC Authority to clarify on the following points: (a) Commercial substance point Would IFSC Authority require the SPVs to have any commercial Page 5 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 substance for the SPV? If yes, please specify in the form of any regulation/ circular and what all those requirements would be? (b) Whether the SPVs would be allowed to lease out or undertake any transaction involving foreign operators? (c) Can single SPV undertake multiple leasing/ financing transactions? 9. Reg. 1. The SPV definition should be The present wording defines an SPV Replace with: “Special Purpose 2(1)(n) – narrowed and conceptually as a Finance Company “promoted or Vehicle (SPV) means a Finance Definition tightened. managed or administered” by a Company established in IFSC of “SPV” TCSP. For a structure that may be for undertaking one or more expected to support orphan or permissible leasing or financing bankruptcy-remote characteristics, activities, and which may be that language is too wide. The words incorporated and “promoted” and “managed” can blur administered by a Trust and lines around ownership, control, Company Service Provider in agency, and substantive accordance with applicable law independence. In cross-border and regulatory safeguards.” structured finance, the legal architecture of the vehicle should reduce ambiguity, not create it. 10. Reg. The TCSP definition should make clear The current definition is functional, but Add explanation: “For the 2(1)(o) – that the role is administrative and the framework would benefit from avoidance of doubt, the role of Definition fiduciary, not commercial control of the expressly clarifying that the TCSP’s a TCSP in relation to an SPV of SPV. role is to provide structuring, shall not, merely by reason of “TCSP” administration, governance support, incorporation, administration, and other permitted fiduciary services nominee, trustee, or registered Page 6 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 without diluting the separate legal office services, be construed as identity of the SPV. This matters for beneficial ownership or market confidence and to avoid future commercial control of the SPV.” control-based recharacterisation. 11. Reg. The enabling clause is useful, but it Permitting leasing or financing activity Add a proviso or explanation 5(1)(iii)( should be accompanied by structural through an SPV is directionally right. stating that SPVs may be ma) safeguards for SPVs undertaking However, if the intention is to support subject to conditions specified leasing or financing activity. internationally credible structuring, the by the Authority regarding framework should also clarify the separateness, governance, expected safeguards for such SPVs, record-keeping, continuity of especially where they are intended to administration, and transaction- be transaction-specific or bankruptcy- specific restrictions. remote vehicles. Without this, the regime remains permissive but incomplete. 12. Schedule The low-capital approach may be A transaction-specific SPV can Add explanation: “The , Serial commercially acceptable, but only if justifiably operate with light capital proportionate capital treatment No. 4 the structural discipline of the SPV is requirements. The issue is not the low for SPVs shall be without strengthened explicitly. threshold by itself. The issue is that prejudice to the requirement to where prudential burden is maintain appropriate intentionally light, the legal and governance, operational governance architecture has to be continuity, and structural correspondingly clear. Otherwise, the safeguards commensurate with framework risks being light on capital the nature of the transaction.” without being strong on separateness, continuity, and transaction integrity. 13. General Economic Substance Requirements Value Addition for SPVs • Enhances credibility Change Required Rationale with global investors Introduce mandatory economic Currently, SPVs are treated as light- & lessors substance norms for SPVs, touch entities. However: • Enables tax treaty including: • Risk of being treated as benefits • Minimum local directors “brass plate entities” • Prevents regulatory (resident in IFSC) • May face tax challenges arbitrage perception • Decision-making in IFSC globally (BEPS / OECD Global Alignment scrutiny) Page 7 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 • Minimum operational presence • Ireland (Section 110 (board meetings, records, SPVs): Strong control) substance + local directors • Singapore (Aircraft Leasing Scheme): Substance-linked tax incentives • UAE (DIFC/ADGM): Mandatory local governance presence 14. General Bankruptcy Remoteness & Ring- Rationale Value Addition Fencing of SPVs Current draft does not clearly define • Critical for credit rating insolvency protection mechanics & investor comfort Change Required • Enables securitisation Explicitly mandate: and structured • Bankruptcy remote finance participation structures Global Alignment • Legal ring-fencing of • Ireland: SPVs assets/liabilities structured as orphan • Restrictions on cross- entities via charitable collateralisation trusts • Singapore: Bankruptcy remote SPVs widely used • UAE (ADGM): Strong insolvency framework aligned with English law 15. General Clarity on Tax Neutrality & Rationale Value Addition Withholding Framework Tax certainty is the single biggest • Reduces ambiguity for driver of leasing location decisions global lessors Change Required • Prevents migration to Explicit cross-reference / clarification: competing jurisdictions Page 8 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 • Tax neutrality for SPVs Global Alignment • Withholding tax clarity on lease • Ireland: Section 110 rentals ensures tax neutrality • GST implications • Singapore: Concessionary tax regime • UAE: Zero/low tax regime clarity 16. General Cross-Border Recognition & Treaty Rationale Value Addition Benefits Without treaty clarity: • Attracts foreign capital • IFSC SPVs may not be • Improves lease pricing Change Required globally competitive competitiveness Provide: Global Alignment • Recognition of IFSC SPVs • Ireland: Extensive tax under international tax treaty network treaties • Singapore: Strong • Guidance on double taxation treaty access avoidance • UAE: Expanding treaty base 17. General Independent Directors / Governance Rationale Value Addition for SPVs SPVs may be controlled by sponsors • Improves → governance risk transparency Change Required • Supports institutional Mandate: investor participation • At least 1–2 independent Global Alignment directors for large SPVs • Ireland: Independent • Board governance guidelines directors standard practice • Singapore: Governance expectations for structured vehicles • UAE: Strong corporate governance codes Page 9 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 18. General Explicit Legal Framework for Rationale Value Addition Orphan Structures Currently missing — critical for: • Enables securitisation • Bankruptcy remoteness & structured leasing Change Required • True off-balance sheet • Attracts global lessors Enable: structuring Global Alignment • Use of charitable trusts / • Ireland: Orphan SPVs foundations to hold SPV via trusts shares • Singapore: Foundation structures • ADGM: Foundations regime 19. General 9. Operational Flexibility for SPVs Rationale Global Alignment SPVs are transaction-specific • All major hubs allow entities, not full operating companies lean SPV structures Change Required Value Addition Provide exemptions / clarity on: • Reduces cost of doing • Staffing requirements business • Physical presence • Improves ease of structuring • Outsourcing permissions 20. General 10. Global Market Access & Listing Rationale Value Addition Enablement Missing link between leasing + • Boosts IFSC as capital markets financial hub • Encourages Change Required securitisation, bonds, Enable: ABS markets • Listing of leasing SPVs / Global Alignment instruments on IFSC • Ireland: Strong exchanges securitisation market • Access to global capital • Singapore: Capital markets markets integration Page 10 of 11Consolidated list of Public Comments on the proposed IFSCA (Finance Company) (Amendment) Regulations, 2026 • UAE: NASDAQ Dubai listings 21. General Introduce a “Global Leasing Nil Nil Competitiveness Framework” IFSCA may consider: • Publishing a comparative positioning note vs Ireland, Singapore, UAE • Providing end-to-end regulatory + tax clarity in one place Impact • Positions IFSC as serious global alternative • Reduces reliance on offshore leasing hubs IFSCA Response: Based on the comments received, the proposed draft IFSCA (Finance Company) (Amendment) Regulations, 2026, was suitably modified and placed before the Authority in the meeting held on April 17, 2026. The above comments/ suggestions were also placed before the Authority. *** Page 11 of 11