With the recent implementation of the IFSCA (Fund Management) Regulations, 2025, the financial services industry has been seeking clarity around the eligibility criteria for Key Managerial Personnel (KMPs)—particularly Principal Officers (POs) and Compliance Officers (COs)—within Fund Management Entities (FMEs) operating in the International Financial Services Centre (IFSC). In response, the International Financial Services Centres Authority (IFSCA) has issued detailed Guidelines on Ascertaining KMP Eligibility, anchored under Regulation 7 of the FM Regulations.
These guidelines aim to ensure transparency, consistency, and informed decision-making among FMEs when appointing KMPs.
Regulation 7(5): Qualifications and Experience Requirements
Under Regulation 7(5), KMPs (including POs and COs) must:
Be based out of the IFSC, and
Possess requisite qualifications and experience, defined as follows:
- Educational Qualifications
Candidates must hold a postgraduate degree/diploma (minimum one year) in fields such as finance, law, business, or economics from a recognized Indian or foreign institution. Alternatively, a CFA, FRM, or membership in ICAI, ICSI, ICMAI also qualifies.
For Principal Officers with 15+ years of relevant experience, a graduate degree in any discipline is sufficient.
- Relevant Work Experience
A minimum of five years’ experience in securities markets or financial products is required, with at least three years in core roles like:
Portfolio/fund management
Investment advisory
Broker-dealer or investment banking
Regulatory roles (SEBI, RBI, IRDAI, PFRDA)
Consultancy in fund-related services (e.g., due diligence or transaction advisory)
For COs under sub-regulation (2), the requirement can be three years, provided the candidate has relevant compliance or risk management experience within regulated entities or listed companies.
Calculation of Experience: What Counts?
The guidelines provide a comprehensive table categorizing roles and entities considered relevant. Experience with the following is accepted:
Regulated intermediaries under SEBI, RBI, IRDAI, or PFRDA
Fund managers, investment advisers, brokers, analysts, credit rating agencies
Market Infrastructure Institutions like stock exchanges, depositories
Regulatory bodies (Indian or foreign)
Consultancy firms, but only up to two years if the role was advisory and fund-related
Note: Personal fund trading, unregistered family office work, and back-office roles (e.g., IT, HR) are not counted.
Practical Considerations for FMEs
Get Pre-Approval: FMEs are encouraged to seek IFSCA’s confirmation before appointing a KMP to avoid compliance delays.
Re-application Fee: If a proposed KMP is found ineligible, future applications for that candidate must include the prescribed fee.
Documentary Evidence: FMEs must clearly document the KMP’s role, especially when they worked in consultancy or were outsourced to funds.
Role Specificity Matters: For COs, only securities market-related compliance experience is valid—non-financial regulatory experience, like in the FDA domain, does not count.
Conclusion
The new guidelines issued under Regulation 7 of the IFSCA Fund Management Regulations provide much-needed clarity for FMEs navigating the complexities of hiring senior personnel. By setting clear standards for qualifications and relevant experience, the Authority ensures that the leadership of fund management entities within IFSCs remains robust, qualified, and globally credible. FMEs are advised to closely follow these criteria and consult the Authority proactively to ensure compliance and streamline the KMP appointment process.