IFSCA Fines Emkayglobal ₹1 Lakh Because Its Principal Officer Worked from Ahmedabad, Not GIFT IFSC

The 8 October 2026 order treats a Principal Officer who worked from outside the IFSC as a breach of Regulation 9(1), and as a manpower and resources failure under the CMI Regulations, 2025.

Key takeaways

• ₹1 lakh penalty: IFSCA imposed a penalty on Emkayglobal Financial Services IFSC Private Limited for violations relating to the Principal Officer's location and the intermediary's manpower and resources.
• Actual work location matters: Formal appointment and accessibility alone did not satisfy Regulation 9(1) on the facts examined in the order.
• Related compliance obligations: The absence of an IFSC-based Principal Officer also resulted in findings under Regulation 9(6) and Clause 16 of Part A of Schedule II.
• Business difficulties are not an automatic exemption: Low revenue, operating losses and recruitment challenges did not excuse the non-compliance.
• Corrective action does not erase past violations: Appointing a GIFT City-based Principal Officer was a mitigating factor, but it did not absolve the intermediary of the earlier breach.
• No prescribed attendance threshold: The order does not specify a minimum number of days a Principal Officer must attend the IFSC office. Entities should assess the officer's actual work location and responsibilities against the applicable requirements.

On 8 October 2026, IFSCA’s Quasi-Judicial Authority for Enforcement (QJAE) imposed a penalty of ₹1,00,000 on Emkayglobal Financial Services IFSC Private Limited, a stockbroker registered in GIFT IFSC. The broker had designated a Principal Officer, but that officer worked from Ahmedabad and, according to the broker’s own Compliance Officer, had never visited the GIFT City office. The QJAE held that this breached Regulation 9(1) of the IFSCA (Capital Market Intermediaries) Regulations, 2025, which requires a Principal Officer “based out of IFSC”. It also held that the absence of a Principal Officer meant the broker did not have adequate manpower or resources, which breached Regulation 9(6) and Regulation 15 read with Clause 16 of Part A of Schedule II. The broker appointed a full-time, GIFT-based Principal Officer in May 2026. That appointment reduced the penalty but did not end the proceedings.

The order at a glance

 Ten months of surprise visits before the show cause notice

The proceedings did not begin with a show cause notice. They followed a series of supervisory visits, an advisory letter, a warning letter and written responses from the broker.

The sequence recorded in the order is significant because the regulator had raised the issue well before commencing adjudication.

The chronology explains why the matter could not be treated simply as an initial oversight. IFSCA had first issued an advisory and then a warning with a specific deadline. The subsequent visit in February 2026 found that the Principal Officer was still not based at the IFSC office, despite the broker's earlier representation.

A Principal Officer designated on paper is not necessarily based in IFSC

Regulation 9(1) of the IFSCA (Capital Market Intermediaries) Regulations, 2025 requires a capital market intermediary to designate a Principal Officer and a separate Compliance Officer based out of an IFSC.

The broker's explanation, recorded in the order, was that the Principal Officer had worked with the parent entity for more than 15 years in business development. He had been given the Principal Officer responsibility in addition to his existing duties. He was based in Ahmedabad, travelled for client engagements and, according to the broker, remained accessible to IFSCA and capable of discharging his regulatory responsibilities.

The Quasi-Judicial Authority for Enforcement did not accept accessibility as a substitute for being based in the IFSC. It relied on the repeated supervisory visits, the advisory and warning letters, and the subsequent confirmation that the officer had never visited the GIFT City office.

The authority concluded that the Principal Officer was not based out of the GIFT IFSC office and held that Regulation 9(1) had been violated.

The distinction is important. The order does not define the expression “based out of IFSC” or establish a numerical attendance threshold. It does, however, make clear that an officer's formal designation and accessibility cannot automatically resolve the question of whether the location requirement has been met.

The facts in this case were particularly stark: the officer reportedly worked from Ahmedabad and had never visited the IFSC office. It would therefore be unsafe to read the order as establishing that any particular frequency of visits is sufficient.

Did the extension circulars defer Regulation 9(1)?

The broker's September 2025 response referred to an upcoming requirement under Regulation 9(1) of the CMI Regulations, 2021. That reference raises a separate question about the implementation deadlines extended by IFSCA during 2025.

The available reproduction of IFSCA's circulars dated 4 September 2025 and 31 December 2025 indicates that the extensions concerned sub-regulations (2), (3) and (8) of Regulation 9. They did not appear to extend the deadline for sub-regulation (1), which contains the requirement that the Principal Officer and Compliance Officer be based out of the IFSC.

The order itself does not discuss this transition issue in detail. It treats Regulation 9(1) as applicable to the period under examination.

How one missing officer became a manpower and resources violation

The authority also found violations of Regulation 9(6) and Regulation 15 read with Clause 16 of Part A of Schedule II of the CMI Regulations, 2025.

Regulation 9(6) requires a CMI to maintain adequate manpower commensurate with its business activities in an IFSC. Clause 16 of the Code of Conduct requires the intermediary to have and effectively employ appropriate resources and procedures for the efficient performance of its business.

The reasoning appears in paragraph 21 of the order. The Principal Officer is responsible for the intermediary's overall operations and for ensuring that other employees comply with the applicable CMI Regulations. Because the broker had no Principal Officer based out of the IFSC for almost a year, the authority concluded that it could not be said to have adequate manpower or appropriate resources.

The order did not separately assess the broker's total headcount, transaction volumes, staffing ratios or back-office capacity. Instead, it connected the absence of the officer responsible for overall operations with the requirements relating to manpower and resources.

That approach has practical implications. A CMI facing a finding under Regulation 9(1) should also examine whether the same facts could expose it to scrutiny under Regulation 9(6) and the Code of Conduct.

Two points in the order deserve separate mention.

First, the Compliance Officer was also absent during the four visits in 2025. However, the findings in the final order concern the Principal Officer. The order does not explain why the Compliance Officer's absence was not separately charged.

Second, the warning letter issued in December 2025 referred to Regulation 11(b), whereas the show cause notice and final findings did not. The order does not explain this difference. No further conclusion should be drawn from it without additional material.

Low revenue and operating losses did not reduce the obligation

The broker submitted that its IFSC operations were at an early stage. It referred to operating losses in FY 2024–25 and earlier years and stated that its modest profit in FY 2025–26 was mainly attributable to foreign exchange valuation.

It also cited difficulties in recruiting suitable candidates who met the relevant eligibility and fit-and-proper criteria. The broker pointed to the absence of investor complaints and the corrective action it had taken.

The authority rejected the argument that the requirement to have a Principal Officer based out of the IFSC depended on the intermediary's revenue. It treated the requirement as an essential regulatory obligation applicable to a CMI.

The order records the revenue figure inconsistently. Paragraph 9.4 refers to USD 3,387,021, paragraph 12.3 refers to “Rs. 3,387,021”, and paragraph 19 gives the figure as INR 33,87,021. The order does not reconcile these figures. The article therefore should not present any one of them as definitive.

The recruitment difficulty was not separately analysed in detail in the findings. The outcome nevertheless makes clear that the explanation did not excuse the period of non-compliance.

Why the penalty stopped at ₹1 lakh

The authority imposed a penalty of ₹1,00,000 under Section 15HB of the SEBI Act, 1992. The order describes Section 15HB as the residuary penalty provision applicable where no separate penalty is provided.

The order relies on Section 13(4) of the IFSCA Act, which applies relevant procedural and penalty provisions of the enactments listed in the First Schedule, with necessary modifications, to financial products, services and institutions in an IFSC.

In considering the penalty, the authority referred to the factors in Section 15J of the SEBI Act: disproportionate gain, loss to investors and the repetitive nature of the default. It also cited the Supreme Court's decision in Adjudicating Officer, SEBI v. Bhavesh Pabari (2019) 5 SCC 90, which recognises that factors beyond those expressly listed in Section 15J may be considered.

The mitigating factor specifically identified in the order was the subsequent appointment of a Principal Officer based in GIFT City.

The penalty of ₹1 lakh is the minimum amount stated in Section 15HB as quoted in the order. Although the authority referred to the statutory factors, it did not explain in detail how each factor affected the amount imposed. The order also records no quantified investor loss or disproportionate gain.

The authority's conclusion in paragraph 22 is particularly relevant: the later appointment could not absolve the broker of the consequences of its earlier violation.

The distinction is straightforward. Corrective action can be relevant when a regulator determines the appropriate penalty, but it does not necessarily eliminate liability for a past breach.

Payment and appeal

The order directs the broker to pay the penalty within 45 days of receiving it. It also provides for simple interest at 12% per annum after the payment deadline until the amount is paid.

Under Section 13(5) of the IFSCA Act, the penalty is to be deposited in the foreign currency equivalent of ₹1,00,000. The order specifies the exchange rate notified by the Reserve Bank of India on the date of the order, 8 October 2026, rather than the date of payment.

The order states that an appeal may be filed before the Securities Appellate Tribunal under Section 15T of the SEBI Act, 1992, read with Section 13(4) of the IFSCA Act, 2019.

Illustration: a group executive designated as Principal Officer

In the hypothetical situation, the CMI would need to examine the officer's actual place of work, responsibilities and deployment against the applicable regulatory requirement. Merely relying on the appointment letter or the officer's availability may not adequately address the issue.

If the authority applied the reasoning in the Emkayglobal order to materially similar facts, the arrangement could also invite scrutiny under Regulation 9(6) and Clause 16. A subsequent appointment of a Principal Officer genuinely based in GIFT City could help demonstrate remediation, but it would not automatically eliminate exposure for the earlier period.

A different situation may arise where a Principal Officer is genuinely based in GIFT City but frequently travels for client meetings or other business requirements. The order does not establish how much travel is acceptable in such circumstances. It should not be treated as having settled that question.

Records and controls a CMI may review after this order

The following are suggested controls for consideration. They are not additional obligations expressly prescribed by the order. Each should be assessed against the applicable regulations and the intermediary's actual operating model.

Questions readers ask

What penalty did IFSCA impose on Emkayglobal Financial Services IFSC?

The order imposed a penalty of ₹1,00,000 under Section 15HB of the SEBI Act, 1992, payable within 45 days of receipt of the order in the foreign currency equivalent specified by the order.

What does “based out of IFSC” mean for a Principal Officer?

The order does not establish a comprehensive definition or a minimum attendance threshold. In this case, the authority held that the requirement was not met where the Principal Officer worked from Ahmedabad and had never visited the GIFT City office, despite being formally designated and reportedly accessible.

Did IFSCA's 2025 extension circulars defer Regulation 9(1)?

The available reproduction of the circulars indicates that the extensions covered sub-regulations (2), (3) and (8) of Regulation 9, rather than sub-regulation (1). The original circulars should be checked before relying on this distinction.

Does appointing a compliant Principal Officer later eliminate the earlier breach?

Not according to this order. The later appointment was treated as a mitigating factor, but the authority held that it did not absolve the broker of the earlier violation.

Can a CMI argue that its revenue is too small to require a Principal Officer based in IFSC?

The authority rejected the revenue-based argument in this case. It treated the location requirement as an essential regulatory obligation that did not depend on the intermediary's revenue.

Can the order be appealed?

The order states that an appeal lies to the Securities Appellate Tribunal under Section 15T of the SEBI Act, 1992, read with Section 13(4) of the IFSCA Act, 2019.

By CS Prashant Kumar, Founder, FUNDREG