Authored by R & D Law Chambers LLP | Practice led by Ravish Bhatt, Dual-qualified lawyer (India and England & Wales) | Bar Council of Gujarat, Enrolment G/504/2008 | SRA (non-practising) Registration No. 492 477 | ADIT, Chartered Institute of Taxation, London
Published: 3 August 2026 | Last reviewed: 3 August 2026
| This article states the position as at 3 August 2026. The two notifications discussed were issued on 4 January 2017 under section 462 of the Companies Act 2013 and remain operative, but their beneficiary definition predates the IFSCA Act 2019. Where the interaction between the 2017 wording and the post-2019 regulatory architecture raises an unresolved question, the text says so and labels the analysis accordingly. |
Index of Topics
1. The short answer
2. The statutory hook: Section 462
3. Who is a “Specified IFSC company”?
4. What GSR 9(E) does for private companies
5. What GSR 08(E) adds for public companies
6. Section 2(41) and Section 3(2): a closer look
7. The IFSCA Act 2019 problem: the live interpretive question
8. The gap is being closed piecemeal: the Section 186 example
9. What these notifications are not
10. The practitioner’s mental model
11. How we help
12. Frequently Asked Questions
1. The short answer
| Two notifications of the Ministry of Corporate Affairs, both dated 4 January 2017, GSR 08(E) for unlisted public companies and GSR 9(E) for private companies, exempt “Specified IFSC companies” from a large body of Companies Act 2013 compliance. GSR 08(E) carves out 59 provisions and GSR 9(E) carves out 39. They remain operative, but their beneficiary definition was drafted before the IFSCA Act 2019, which creates a live interpretive question this article resolves. |
Anyone incorporating an entity in GIFT City IFSC quickly meets these two notifications, and just as quickly meets the confusion around them. Why are there two? What do they actually remove? And do they still work now that the International Financial Services Centres Authority, not the sectoral regulators named in the notifications, licenses IFSC entities? This article answers each question from the primary text.
A preliminary correction, because the numbers are often mis-stated: the notifications are dated 4 January 2017 (not 4 July), and the public-company notification is GSR 08(E) (not GSR 80). Both were laid before Parliament as section 462 requires.
2. The statutory hook: Section 462
| Section 462 of the Companies Act 2013 lets the Central Government, by notification, exempt any class of companies from specified provisions of the Act, or apply those provisions to them with exceptions, modifications, and adaptations. It is the enabling power behind both notifications, and it is deliberately a class-based exemption power rather than an amendment of the Act itself. |
Two features of section 462 matter here. First, the relief is granted to a class of companies, not to individuals, so the notifications must define the class they benefit, which becomes the crux of the later IFSCA Act question. Second, section 462(2) requires that a draft of any such notification be laid before both Houses of Parliament, which builds a measure of legislative oversight into what is otherwise executive relief. Using an exemption power rather than amending the Companies Act keeps the parent statute intact while allowing a tailored compliance regime for a defined class.
3. Who is a “Specified IFSC company”?
| Both notifications define their beneficiary as a company “licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India” from an International Financial Services Centre located in an approved multi-services Special Economic Zone. The private-company and public-company definitions are otherwise parallel, which is precisely why two separate notifications were needed. |
This shared definition is the hinge of the whole subject. It ties the benefit to a licence from the RBI, SEBI, or IRDAI, the sectoral regulators who, in 2017, licensed IFSC financial activity. That wording was accurate when written. It became a drafting problem after the IFSCA Act 2019, as section 7 below explains.
4. What GSR 9(E) does for private companies
| GSR 9(E) exempts specified IFSC private companies from 39 provisions of the Companies Act 2013, with modifications grouped around operational flexibility, capital-raising, governance, identity, and financial-year alignment. The relief is real but incremental, because private companies already carry lighter obligations than public companies. |
The exemptions fall into recognisable groups. On identity and structure, the company must be limited by shares (section 3(2)), carry the “IFSC” suffix (section 4(1)(a)), state financial-services objects in line with its licence (section 4(1)(c)), and keep its registered office within the IFSC at all times, with no shifting outside it (section 12(1) and (5)). On timelines, numerous thirty-day and fifteen-day periods are extended to sixty days. On capital-raising, the prohibition on a fresh private-placement offer while an earlier allotment is pending is disapplied (section 42(3) and (7)), as is the sweat-equity timing restriction (section 54(1)(c)). On governance, corporate social responsibility is disapplied for five years from commencement of business (section 135), secretarial standards compliance is disapplied (section 118(10)), the investment-layering restriction is removed (section 186(1)), and the Board may exercise several powers by circulation. Financial-year alignment for a foreign subsidiary is addressed at section 2(41), discussed below.
5. What GSR 08(E) adds for public companies
| GSR 08(E) exempts specified IFSC unlisted public companies from 59 provisions, the 39 shared with private companies plus roughly 20 that address obligations unique to public companies. The additional carve-outs remove much of the public-company governance architecture: independent directors, board committees, director rotation, and the managerial-remuneration cap. |
The additional public-company relief is the striking part. Specified IFSC public companies need not appoint independent directors (section 149(4) to (11)) or a woman director (section 149(1)); need not rotate directors (section 152(6) and (7)); need not constitute an audit committee, nomination-and-remuneration committee, or stakeholders committee (sections 177 and 178); and are not bound by the managerial-remuneration cap (section 197). The related-party-transaction board-consent requirement is relaxed (section 188), preference-share voting restrictions are eased (section 47), and deposits from members are permitted up to 100% of paid-up capital and free reserves (section 73(2)).
The practical effect is that, for an IFSC public company, the governance baseline moves close to that of a Singapore or DIFC private-placement entity. That is a deliberate design choice: IFSC public companies are typically closely held, professionally managed, or part of regulated international groups, so the mainland public-company governance apparatus would be disproportionate to how they actually operate.
6. Section 2(41) and Section 3(2): a closer look
| Section 2(41) is modified so that a Specified IFSC company that is a subsidiary of a foreign company may align its financial year with its holding company’s, without Tribunal approval. Section 3(2) requires that an IFSC company be formed only as a company limited by shares. The first is a consolidation convenience for multinational groups; the second reflects the capital-markets orientation of the IFSC model. |
On section 2(41), the ordinary rule requires a company to follow the April-to-March financial year unless the Tribunal permits a different period for a company that is a holding or subsidiary of a foreign entity, to align with the foreign parent. The modification removes the Tribunal step for Specified IFSC companies, letting a foreign parent consolidate its IFSC subsidiary on the group’s own financial-year cycle without a separate application. For an international financial group, that is a genuine administrative saving.
On section 3(2), confining the IFSC company to the “limited by shares” form excludes companies limited by guarantee and unlimited companies. This is consistent with the IFSC being a capital-markets and financial-services jurisdiction, where share-capital structures are the norm and the guarantee and unlimited forms have no natural place.
7. The IFSCA Act 2019 problem: the live interpretive question
| Both notifications benefit a company “licensed by RBI or SEBI or IRDAI.” But since the IFSCA Act 2019 took operational effect on 1 October 2020, IFSC entities are licensed by IFSCA, which, under section 13, exercises the powers formerly held by those regulators within the IFSC. On a strict reading, an IFSCA-licensed entity does not fall within the 2017 definition. This is the central unresolved question, and it is best treated with care. |
Section 13(1) of the IFSCA Act provides that, notwithstanding anything in any other law, the powers of the appropriate regulators listed in the First Schedule, the RBI, SEBI, IRDAI, and PFRDA, are, within the IFSC, exercised by IFSCA. After 1 October 2020, no new IFSC entity is licensed by the RBI, SEBI, or IRDAI; it is licensed by IFSCA. The 2017 notifications, however, still name the three sectoral regulators.
The purposive bridge (labelled as analysis, not settled law). An IFSCA licence is issued in the exercise of powers that were formerly the sectoral regulators’, by operation of section 13. On that footing, the phrase “licensed by RBI or SEBI or IRDAI” can be read purposively, after the IFSCA Act, to include licensing by the authority that has assumed those powers. This is a reasonable construction, but no judicial pronouncement or explicit MCA clarification squarely confirming it has been located; it should therefore be advanced as a construction argument, not asserted as settled law. As at mid-2025 the notifications remained in force with their original “licensed by RBI or SEBI or IRDAI” wording unamended, so the textual gap persists and has not been formally patched.
For entities licensed by the RBI, SEBI, or IRDAI before 1 October 2020: the grandfathered banking units and similar, the notifications apply on their literal wording without difficulty. In practice, the market and regulators treat the notifications as operative for IFSC companies generally, and corporate-law compliance for those companies runs under the Companies Act except for these carve-outs. But the definitional lacuna has not been formally closed, and that is the honest statement of the position.
8. The gap is being closed piecemeal: the Section 186 example
| Rather than re-draft the 2017 definition, the Government has begun extending IFSC relief through targeted amendments elsewhere. In November 2025, the section 186 exemption available to RBI-registered non-banking financial companies was extended to IFSCA-registered Finance Companies, a concrete signal that official policy treats IFSC entities as intended beneficiaries of such relief. |
The Companies (Meetings of Board and its Powers) Amendment Rules 2025, notified on 3 November 2025 and in force immediately, amended Rule 11(2) so that, for the purposes of section 186(11)(a), the expression “business of financing industrial enterprises” includes, for an IFSCA-registered Finance Company, the activities in sub-clause (a) (lending) and sub-clause (e) (Global or Regional Corporate Treasury Centre) of Regulation 5(1)(ii) of the IFSCA (Finance Company) Regulations 2021, in the ordinary course of business, putting such companies at par with RBI-registered NBFCs for that exemption. The significance is less the specific relief than the method: instead of correcting the 2017 notifications’ definitional wording, the Government extends IFSC benefits through fresh, IFSCA-aware amendments. That pattern reinforces the purposive reading in section 7, even as it leaves the original 2017 wording untouched.
9. What these notifications are not
| These notifications are not sandbox permissions, not activity or financial-service licences, and not fiscal benefits. They are purely Companies Act compliance relaxations that sit on top of a separately obtained IFSCA licence. They confer no permission to carry on any financial activity and no tax or duty relief. |
This distinction matters because the three are frequently conflated. The permission to carry on financial services in the IFSC comes from the IFSCA licence under the relevant sectoral regulations. The tax benefits come from the Income-tax Act (notably section 147 (formerly section 80LA)) and the SEZ and GST frameworks. These two notifications do one thing only: they lighten the Companies Act overhead for an entity that already holds an IFSCA licence and is incorporated under the Companies Act 2013.
10. The practitioner’s mental model
| The clearest way to hold all of this is as three separate gates: an IFSCA activity licence; incorporation under the Companies Act with these exemptions; and tax-benefit entitlement under section 147 (formerly section 80LA). Clearing one gate does not clear the others, and the two 2017 notifications operate only at the second gate. |
Keeping the three gates distinct prevents the most common structuring errors, assuming that an IFSCA licence automatically carries the Companies Act relief, or that Companies Act incorporation in the IFSC automatically secures the tax holiday. Each gate has its own conditions and its own authority. On the Companies Act gate specifically, the cleaner long-term fix would be a one-line MCA amendment inserting “IFSCA” into the beneficiary definition of both 2017 notifications, which would remove the interpretive question addressed in section 7 entirely.
11. How we help
R & D Law Chambers LLP advises on the corporate-law architecture of GIFT City IFSC entities: incorporation under the Companies Act 2013 and the scope of the GSR 08(E) and GSR 9(E) exemptions; the interaction between those exemptions and the IFSCA licensing framework; board and governance structuring for IFSC public and private companies; and the coordination of the corporate, regulatory, and tax gates that every IFSC entity must clear. The practice combines dual India–England-and-Wales qualification with ADIT-level international tax depth.
12. Frequently Asked Questions
Are the 2017 MCA IFSC exemptions still valid after the IFSCA Act 2019?
The notifications GSR 08(E) and GSR 9(E), both dated 4 January 2017, remain operative and are treated as such by the market and regulators. However, their beneficiary definition refers to companies “licensed by RBI or SEBI or IRDAI,” whereas IFSC entities are now licensed by IFSCA under the IFSCA Act 2019. Entities licensed before 1 October 2020 fall within the wording directly; for those licensed by IFSCA afterwards, the exemptions are best supported by a purposive reading of section 13, which has not yet been squarely confirmed by a court or an explicit MCA clarification.
What is the difference between GSR 08(E) and GSR 9(E)?
GSR 9(E) applies to specified IFSC private companies and exempts them from 39 provisions of the Companies Act 2013. GSR 08(E) applies to specified IFSC unlisted public companies and exempts them from 59 provisions, the 39 shared with private companies plus about 20 additional carve-outs that address public-company-only obligations such as independent directors, board committees, director rotation, and the managerial-remuneration cap. Two notifications were needed because public and private companies carry different baseline obligations under the Act.
Do IFSC companies have to appoint independent directors?
No. Under GSR 08(E), specified IFSC unlisted public companies are exempted from the independent-director requirements in section 149(4) to (11) of the Companies Act 2013, along with the woman-director requirement, director rotation, and the audit, nomination-and-remuneration, and stakeholders committees. Private companies do not face these requirements in the first place. The exemptions reflect that IFSC companies are typically closely held or part of regulated international groups.
Is CSR under Section 135 applicable to a GIFT City company?
The corporate social responsibility obligation in section 135 of the Companies Act 2013 is disapplied for a specified IFSC company for five years from the commencement of its business, under both GSR 08(E) and GSR 9(E). After that five-year period, the ordinary section 135 thresholds and obligations apply if the company meets them. This is one of several governance relaxations designed to reduce the early-stage compliance burden on IFSC entities.
Can an IFSC subsidiary align its financial year with its foreign parent?
Yes. Section 2(41) of the Companies Act 2013 is modified for a Specified IFSC company that is a subsidiary of a foreign company, allowing it to align its financial year with its holding company’s without the Tribunal approval that the ordinary rule requires. This removes an administrative step for multinational groups consolidating an IFSC subsidiary on the group’s own financial-year cycle.
Do these notifications give any tax benefits?
No. GSR 08(E) and GSR 9(E) are purely Companies Act compliance relaxations. They confer no tax or duty relief and no permission to carry on any financial activity. Tax benefits for IFSC entities come from separate provisions, notably section 147 of the Income-tax Act 2025 (formerly section 80LA of the Income-tax Act 1961) and the SEZ and GST frameworks, and the permission to carry on financial services comes from the IFSCA licence under the relevant sectoral regulations.
This article is for general information as at 3 August 2026 and is not legal advice. Laws, regulations, and regulator practice evolve. Seek jurisdiction-specific advice before acting.