The International Financial Services Centres Authority on 16th August 2022, has notified the framework for entities to get registered under Finance Company Regulations for undertaking ship lease transactions. This framework shall apply to all eligible applicants engaging in one or more of the permissible activities as notified below:
An applicant desirous of undertaking permissible activities in IFSCs as a lessor shall meet the eligibility criteria and other requirements as specified under the Finance Company Regulations, including the following:
- The applicant shall set up operations in an IFSC in the form of a Company or a Limited Liability Partnership (LLP) or a Trust or a Branch under this Framework or in any other form as may be specified by the IFSCA from time to time.
- In case the applicant is a company, the ‘promoter’, as defined in the Companies Act, 2013, of the applicant shall be located in a Financial Action Task Force compliant jurisdiction. In case the applicant is a LLP or a Trust, the partners or the trustees, as the case may be, shall also comply with this requirement.
A lessor in IFSCs shall be permitted to undertake all or any of the following activities under operating lease:
- Operating lease;
- Asset Management Support Services for assets owned or leased out by the entity or by its wholly owned subsidiary(ies) or by a branch of its wholly owned subsidiary set up in IFSCs in India;
- Sale and lease back, purchase, novation, transfer, assignment, and such other similar transactions in relation to ship lease.
- any other related activity with the prior approval of the IFSCA.
Permissible Activities under financial lease and hybrid of operating and financial lease:
A lessor in IFSCs shall be permitted to undertake all or any of the following activities:
- Financial lease;
- Hybrid of financial and operating lease;
- any other related activity with the prior approval of the IFSCA.
All transactions undertaken by a lessor shall be in a freely convertible foreign currency only. However, the lessor may defray their administrative expenses in INR by maintaining a separate INR account. The lessor shall maintain its books of accounts, records and documents as required under applicable law. The books of accounts and their financial information shall be maintained in any freely convertible currency.
