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Writer's pictureGIFT CFO
3 days ago2 min read

Debenture Trustees in GIFT City

The International Financial Services Centers Authority (IFSCA) has released a comprehensive framework for Debenture Trustees operating within the GIFT City International Financial Services Centre (IFSC). This framework is designed to streamline processes, ensure compliance, and enhance investor protection.


Key Definitions

A “debenture trustee” is defined as a trustee appointed for any issue of debentures.


Permissible Clients

Debenture trustees in GIFT City IFSC can serve:


  • Persons resident outside India

  • Non-resident Indians (NRIs)

  • Non-individual residents in India eligible under FEMA for offshore investment

  • Individual residents in India eligible under the Liberalized Remittance Scheme of the Reserve Bank of India


Permissible Activities

Debenture trustees must:


  • Enter agreements with issuers before opening subscription lists

  • Avoid conflicts of interest with issuers

  • Accept trust deeds containing comprehensive details of the debt issue

  • Ensure prospectuses align with trust deeds

  • Obtain periodic reports on fund utilization and company performance

  • Communicate defaults to debenture holders

  • Appoint nominee directors upon consecutive payment defaults

  • Monitor issuer compliance with debenture terms and trust deed covenants

  • Verify assets and enforce security measures for debenture holders

  • Convene debenture holder meetings as needed

  • Ensure timely redemption and interest payments

  • Report breaches of trust deeds or laws to the Authority

  • Inspect issuer records as necessary


Structure of Eligible Entities

Entities eligible for registration include companies, LLPs, body corporates, and partnership firms. Existing units or branches are also eligible.


Net Worth Requirement


  • Indian Units: USD 1.5 million

  • Foreign Entities: USD 3 million


Fee Structure


  • Application Fee: USD 500

  • Registration Fee: USD 3500

  • Annual Fee: USD 1500 (starting from the next financial year after approval)


Staff Requirement

Entities must appoint a Principal Officer with:


  • A professional or post-graduate degree in finance, law, accountancy, or economics

  • At least five years of relevant experience

  • Sufficient staff with at least graduation degrees


Code of Conduct

Debenture trustees must:


  • Make timely and adequate disclosures to debenture holders

  • Verify the identity and financial situation of clients

  • Share client information with credit rating agencies

  • Avoid misrepresentation and misleading information

  • Protect investor interests and provide best possible advice

  • Maintain high standards of integrity and fairness

  • Avoid manipulative, fraudulent, or deceptive transactions

  • Handle investor grievances promptly

  • Avoid conflicts of interest and disclose potential conflicts

  • Maintain confidentiality of client information

  • Ensure compliance with regulatory requirements

  • Implement internal control procedures and resources

  • Develop an internal code of conduct

  • Ensure proper conduct and qualifications of employees

  • Avoid false market creation and price manipulation

  • Report material breaches to the Authority

  • Maintain confidentiality and avoid insider trading


Tax Benefits


  • 100% Tax Exemption: Business profits are fully exempt for 10 out of the first 15 years of operation.

  • Minimum Alternate Tax (MAT): Reduced MAT rate of 9% for IFSC units.


For more details, visit this article on LinkedIn.




Disclaimer: This post is for general informational purposes only and not professional advice. We strive for accuracy but make no warranties regarding the content's completeness or reliability. Reliance on this information is at your own risk. We disclaim liability for any loss or damage arising from its use. Consult professionals for your specific circumstances.

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