To attract more companies to set shop in the International Financial Services Centre (IFSC), a relaxed regulatory framework that exempts such entities from CSR norms for five years and various other requirements.
A first of its kind, IFSC is being set up in Gujarat as part of a Special Economic Zone (SEZ). Among others, any financial institution in the centre would treated as a non- resident Indian entity located outside India.
The Corporate Affairs Ministry has now come with notifications on exemptions to specified IFSC public and private companies. Separate notifications have been issued for private and public firms set up in the IFSC.
Under the Companies Act, 2013, public companies are those having a paid-up share capital of at least Rs 5 lakh while private ones are those with a minimum paid-up share capital of Rs 1 lakh.
According to officials, IFSC is considered as a foreign territory and the relaxations have been extended to attract more companies into the centre.
As per the Act, certain class of profitable companies are required to shell out at least two per cent of their three- year annual average net profit towards Corporate Social Responsibility (CSR) activities.
The Ministry said Section 135, which pertains to CSR, would not be applicable to specified IFSC public company for five years.
The entities should have the suffix of 'IFSC' or 'International Financial Service Company' as part of their name.
Certain class of companies established in the IFSC would not required to seek approval from the National Company Law Tribunal (NCLT) for following a different financial year than the April-March period.
"In case of a specified IFSC public company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the tribunal shall not be required," the Ministry said.
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