Regulatory framework for Angel Funds to facilitate investments in start-ups


The International Financial Services Centres Authority (IFSCA), in furtherance of its mandate to develop and regulate financial products, financial services and financial institutions in the International Financial Services Centres (IFSC), had notified the IFSCA (Fund Management) Regulations, 2022 in April 2022 enabling the regulatory framework for various activities related to fund management including schemes for investing in early-stage venture capital undertaking (start-ups).


Angel Funds bridge the gap between start-ups and angel investors, who are instrumental in providing mentoring, and resources to the start-ups. In recognition of the same, IFSCA has now issued a framework for Angel funds under the IFSCA (Fund Management) Regulations, 2022. The salient features of the said framework are as under:


  1. A Fund Management Entity (FME) in IFSC will be able to launch Angel Fund by filing a placement memorandum with the Authority under a Green Channel, i.e. the schemes can open for subscription by investors immediately upon filing the placement memorandum with the Authority.
  2. Angel Funds shall accept investments from accredited investors or investors who are willing to commit at least USD 40,000 over 5 years.
  3. Angel Funds are permitted to invest in start-ups as well as other regulated angel schemes in IFSC, India, foreign jurisdictions upon receiving consent from the desirous investors.
  4. While investment(s) by an Angel Fund in a start-up is capped at USD 1,500,000, the Angel fund is permitted to invest in subsequent rounds of fund raising by the start-up in order to protect its shareholding from dilution, subject to certain conditions.


The detailed framework for Angel Funds may be accessed at https://ifsca.gov.in/Circular




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Regulatory Impact Assessment (RIA) for revision of existing Accounting Standards

In accordance with Rule 6 of National Financial Reporting Authority Rules, 2018, the Institute of Chartered Accountants of India (ICAI) has submitted to National Financial Reporting Authority (NFRA) an Approach Paper for revision of existing Accounting Standards of Companies that are not required to follow Indian Accounting Standards (Ind ASs). Alongwith the Approach Paper, the proposed texts of 18 revised Accounting Standards (ASs) out of a total of 32 revised ASs expected to be prescribed upon completion of this AS revision project was submitted by ICAI.

NFRA notes that most of the companies to which these proposed revised ASs will apply are Private Limited Companies. Many of the companies are of very small net worth or turnover or indebtedness or a combination of these. They would be mostly owned by small families, sometimes along with a small circle of friends and relatives. Therefore, public interest in the General Purpose Financial Statements (GPFSs) of these Companies would most likely be minimal. There are a number of Revised ASs which are very large and complex and may not be relevant and useful to the limited users of GPFSs of these Companies. The expected standard audit cost to perform reasonably good quality audit, performed in compliance with the letter and spirit of the Standards on Auditing (SAs) is significantly more than the presently reported audit fee ranges i.e., a very large percentage of AS Companies have reported Payment to Auditors of less than 25 thousand. 

Based on the findings above, and persuaded by the limited extent of public interest in the GPFSs of AS Companies, and the need for enabling a regulatory environment conducive for their economic growth, NFRA has recommended to the ICAI that a Regulatory Impact Assessment be conducted of this revision proposal, duly including all the standard features of such a process, and, in particular, to take action as follows:

  1. The Approach Paper should be developed in a transparent manner after extensive nation-wide consultation with the primary stakeholders i.e., the Preparers – MSMCs (Micro, Small and Medium-size Companies) and Auditors – MSMPs (Micro, Small and Medium-size Practitioners). ICAI is requested to send NFRA the analysis of the public comments on the Approach Paper if the ICAI had performed any such public consultation in the past.
  2. Comprehensive study and research should be undertaken on the costs to the Preparers of compliance with these Revised ASs and their technical resource capacity, which should be evaluated against the likely benefits to all the stakeholders of AS Companies. 
  1. ICAI should reconsider the Structure, Form and Contents of Revised ASs for AS Companies and align the same to the nature, size and complexity of the ASs, to their commercial needs, business size, capacity to comply with the prescribed standards, and relevance to their primary users.

ICAI’s Approach Paper and NFRA’s response to the ICAI Approach Paper have been posted on NFRA’s website at:

https://nfra.gov.in/sites/default/files/Letter%20to%20Secretary%20ICAI%20reg%20Recommendations%20of%20ICAI.pdf  

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Hong Kong – Regulatory framework for Advanced Therapy Products to commence on August 1

Regulatory framework for Advanced Therapy Products to commence on August 1

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     The Department of Health (DH) today (June 25) said that all provisions of the Pharmacy and Poisons (Amendment) Ordinance 2020 (the Amendment Ordinance) to introduce a regulatory framework for Advanced Therapy Products (ATPs) will come into operation on August 1 this year.

     The Amendment Ordinance introduces a clear regulatory framework for ATPs, which cover gene therapy products, somatic cell therapy products and tissue engineered products, in order to safeguard public health and facilitate the development of ATPs. After the Amendment Ordinance comes into operation, ATPs will form a specific subset of pharmaceutical products under the Pharmacy and Poisons Ordinance (Cap. 138). As such, requirements governing pharmaceutical products under Cap. 138 and other relevant ordinances will apply to ATPs. These include registration prior to marketing, obtaining prior approval for conducting clinical trials, licensing of manufacturers and distributors, and import/export control. Furthermore, there will be additional requirements on labelling and record keeping specific to ATPs to enhance traceability of the products.

     To enable stakeholders to have a better understanding of the enhanced regulatory framework for ATPs, the Pharmacy and Poisons Board of Hong Kong has prepared guidance documents relevant to ATPs. In addition, the Board published in the Gazette today the following new editions of Codes of Practice (COPs), which will take effect on August 1 this year:

* Code of Practice for Holder of Wholesale Dealer Licence (2021);
* Code of Practice for Licensed Manufacturers and Registered Authorized Persons 2021;
* Code of Practice for Listed Seller of Poisons (2021); and
* Code of Practice for Authorized Seller of Poisons (2021).

     The Amendment Ordinance, regulatory information and guidance documents relating to ATPs, and the new editions of COPs are available on the dedicated website of the Drug Office of the DH (www.drugoffice.gov.hk/eps/do/en/pharmaceutical_trade/atp_regulation.html) and the website of the Board (www.ppbhk.org.hk/eng/regulation_of_atp.html).