IFSC LLP Framework under the Corporate Laws (Amendment) Bill, 2026: Key Changes for GIFT IFSC Entities

The Corporate Laws (Amendment) Bill, 2026 proposes a specialised framework for Limited Liability Partnerships operating in International Financial Services Centres. A key proposal is the introduction of the Specified International Financial Services Centre Limited Liability Partnership, or Specified IFSC LLP, as a distinct category under the Limited Liability Partnership Act, 2008.

The amendments seek to align the LLP framework more closely with international financial operations through specific provisions on regulatory status, objects, registered office, naming, partner contribution, accounting currency and statutory filings. They also address investor confidentiality, valuation and conversion of specified SEBI- or IFSCA-regulated trusts into LLPs.

Key Changes at a Glance

Proposed Change	Key Implication
Specified IFSC LLP	Separate statutory recognition for LLPs set up in an IFSC and regulated by IFSCA
IFSCA-aligned object clause	Objects to relate to financial services permitted under the IFSCA framework
Registered office in IFSC	Registered office to remain situated in an IFSC at all times
IFSC-specific naming	Separate naming convention for Specified IFSC LLPs
Foreign-currency contribution	Partner contribution to be accounted for in permitted foreign currency
Foreign-currency accounting	Books and financial statements aligned with permitted foreign currency
LLP Agreement filing flexibility	Separate filing framework may be prescribed for eligible regulated LLPs
Periodic reporting of partner changes	Certain partner changes may be reported periodically
Investor confidentiality	Specified information may be protected from public inspection
LLP valuation framework	Greater linkage with the registered valuer framework
Trust-to-LLP conversion	Statutory route for eligible SEBI- or IFSCA-regulated trusts
Tax-neutral conversion	Proposed tax neutrality for qualifying conversion transactions

What is a Specified IFSC LLP?

A Specified IFSC LLP is proposed to mean an LLP that is set up in an International Financial Services Centre and regulated by the International Financial Services Centres Authority (IFSCA).

Merely incorporating an LLP with a registered office in GIFT City would not, by itself, necessarily make it a Specified IFSC LLP. The LLP must also fall within the relevant IFSCA regulatory framework.

IFSCA-Aligned Object Clause

The incorporation document of a Specified IFSC LLP is proposed to state that its objects are to undertake financial services activities permitted under the IFSCA Act, together with matters necessary in furtherance of such financial services and in accordance with applicable IFSCA requirements.

This distinguishes a Specified IFSC LLP from an ordinary LLP. Its statutory objects would need to remain aligned with the financial service for which it is registered or regulated by IFSCA.

Registered Office in IFSC at All Times

The Bill proposes that a Specified IFSC LLP must maintain its registered office in an International Financial Services Centre at all times.

For entities established in GIFT IFSC, this anchors the registered office within the IFSC jurisdiction on a continuing basis. The words “at all times” are significant because the requirement is not limited to the date of incorporation.

IFSC-Specific Naming Convention

The Bill as introduced refers to the expression “International Financial Services Centre LLP” as part of the entity’s name. During the legislative review process, the shorter expression “IFSC LLP” was also considered for operational convenience.

The final naming convention will depend upon the provision ultimately enacted. A separate name helps regulators, investors and counterparties distinguish an IFSC-regulated LLP from an ordinary LLP.

Partner Contribution in Permitted Foreign Currency

One of the most commercially significant reforms concerns partner contribution.

The monetary value of each partner’s contribution in a Specified IFSC LLP is proposed to be accounted for and disclosed in a permitted foreign currency.

For LLPs already established in an IFSC before commencement of the amendment, existing INR-denominated contributions may be converted into a permitted foreign currency within the period and manner to be prescribed. Future monetary contributions would also be aligned with the applicable foreign-currency framework.

This is particularly relevant for GIFT IFSC entities that raise capital, make investments, receive revenue or incur liabilities in currencies such as the US Dollar. Permitting statutory partner contribution to be maintained in the operating currency can reduce the mismatch between the economic substance of the entity’s activities and its statutory capital records.

Books of Account and Financial Statements in Foreign Currency

Where partner contributions are maintained in a permitted foreign currency, a Specified IFSC LLP is proposed to prepare and maintain its books of account, financial statements and other prescribed records in that currency. IFSCA may, however, permit such records to be maintained in Indian Rupees in specified circumstances.

This can provide closer alignment between an entity’s commercial operations and statutory financial reporting. Eligible currencies, exchange-rate treatment and transition procedures would be governed through the final rules and regulatory framework.

For entities operating substantially in foreign currency, this represents an important structural change. It can enable the accounting framework of the LLP to better reflect the currency in which its underlying investments, revenues and funding arrangements are actually undertaken.

Simplified Filing Framework for Regulated LLPs

The Bill proposes compliance flexibility for prescribed classes of LLPs regulated by SEBI or IFSCA.

One important proposal concerns changes in the LLP Agreement. For prescribed regulated LLPs, the manner and frequency for filing changes to the LLP Agreement may be separately prescribed instead of applying the ordinary filing mechanism in every case.

The Bill also proposes flexibility in relation to changes in partners. For eligible classes of LLPs, partner changes may be permitted to be reported periodically, including through an annual reporting mechanism, rather than through an immediate event-based filing for each change.

However, changes in designated partners would continue to be subject to the applicable statutory reporting requirements. These are targeted relaxations and not a blanket exemption from LLP filing requirements.

This proposed distinction is particularly relevant for regulated investment structures where changes in investors or partners may occur more frequently than in conventional operating LLPs.

Confidentiality of Investor Information

For prescribed classes of LLPs registered or regulated by SEBI or IFSCA, specified documents or information may be excluded from public inspection.

This is relevant where filings contain commercially sensitive information relating to investors, partner contributions or ownership interests. The exact scope of protected documents and information will depend upon the final prescribed framework.

The proposal is especially relevant for fund and investment structures where public disclosure of detailed partner-level information may not be commercially appropriate. It seeks to provide a balance between statutory transparency and the confidentiality requirements of regulated investment vehicles.

Valuation Framework for LLPs

The Bill proposes a clearer statutory framework for valuations involving LLPs by applying the principles of Section 247 of the Companies Act, 2013, with necessary modifications, to prescribed valuation matters involving LLPs.

Depending upon the applicable requirement, valuation may become relevant to partner contributions, property and other assets, net worth, liabilities and other prescribed interests or transactions.

This creates a clearer linkage between the LLP framework and the established registered valuer regime.

However, the amendment should not be interpreted as requiring a registered valuation for every LLP transaction. The requirement would arise only where valuation is specifically prescribed under the applicable statutory or regulatory framework.

For regulated entities, this can provide greater clarity on the professional and statutory framework to be followed where valuation is required.

Conversion of SEBI/IFSCA-Regulated Trusts into LLPs

A major structural reform proposed under the Bill is a statutory mechanism for conversion of certain trusts registered and regulated by SEBI or IFSCA into LLPs.

Broadly, the framework contemplates:

Specified Trust → Regulatory Approval / NOC → Prescribed Investor Consent → Conversion into LLP → Vesting of Assets and Liabilities → Dissolution of Trust

Upon conversion, the assets, liabilities, rights and obligations of the eligible trust would vest in the successor LLP. The proposal also contemplates continuity of existing proceedings and obligations.

This can provide a structured route for regulated investment vehicles seeking to change legal form without requiring a conventional transfer of each individual asset and liability.

The practical availability of this mechanism will depend upon eligibility conditions, regulatory approvals, investor-consent requirements and the final procedural framework.

The proposal could therefore become particularly relevant for regulated investment structures presently constituted as trusts where an LLP structure may be considered more suitable from a governance or operational perspective.

Proposed Tax Neutrality for Eligible Trust-to-LLP Conversion

The broader legislative framework also contemplates capital gains tax neutrality for eligible conversion of specified trusts into LLPs, subject to prescribed conditions.

This should be understood as a transaction-specific tax-neutrality measure applicable only to qualifying conversions and not as a general income-tax exemption for all IFSC LLPs.

The tax neutrality provision is significant because a conversion involving vesting of assets and liabilities could otherwise potentially create tax consequences.

The tax treatment of multi-scheme structures, scheme-level assets, investors and other complex arrangements would therefore need to be examined based on the final statutory provisions and the facts of the relevant transaction.

Conclusion

The proposed amendments represent an important development in creating a more specialised LLP framework for entities operating in GIFT IFSC.

If implemented through clear and practical rules, the proposed framework can make the LLP structure more compatible with international financial services and regulated investment activities carried on from GIFT IFSC.

Regulatory Note: The Corporate Laws (Amendment) Bill, 2026 contains proposed legislative changes. Certain aspects discussed above also reflect recommendations considered during the legislative review process. The final legal position will depend upon enactment of the legislation and the applicable rules, regulations, notifications and clarifications issued by MCA, IFSCA and other competent authorities.