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CS Professional · IFSCA - Regulations, Listing and Compliances · Fund Management Services

While processing an application from Kaveri Asset Managers IFSC Pvt Ltd, IFSCA finds that one of its proposed directors was earlier convicted by a court for financial fraud and the applicant did not disclose this. Which approach is most consistent with the IFSCA (Fund Management) Regulations, 2022?

IFSCA may refuse the application. Applicants and their directors and key persons must be fit and proper and must disclose relevant facts truthfully. A fraud conviction that was not disclosed undermines both. Strong net worth or a change of role does not automatically cure that defect.

  1. AIFSCA may refuse the application, because the applicant and its key persons must be fit and proper and must disclose relevant information accuratelyCorrect
  2. BIFSCA must grant registration because the conviction concerns an individual and not the company
  3. CIFSCA must grant registration with a condition that the director's role is reduced to non-executive
  4. DIFSCA may ignore the conviction if the company's net worth comfortably exceeds the requirement

Explanation

Authorisation or registration depends on the applicant and its key persons being fit and proper, and on correct and complete disclosure. A fraud conviction and its non-disclosure count against both. Adequate net worth cannot cure a failure of the fit and proper test, and the company is judged through its directors and key persons.

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