Nature and Structure of Scheme
Regulation 56
Nature and Structure of Scheme
IFSCA (Fund Management) Regulations, 2025No change in 2026Chapter III · Schemes for Fund Management
Chapter III · Schemes for Fund Management
Regulation 56 – Nature and Structure of Scheme
Medium importance about 3 min
Special Situation Funds: Distressed-asset funds — what they can hold, how they are structured and their limits.
1
In plain English
An SSF must be close-ended, with a minimum tenure of three years disclosed in the PM, extendable by up to two years with two-thirds (by value) investor approval, and constituted in IFSC as a company, LLP, or other permitted form.
In plain English
2
The rule, in its own words
Read the exact text of Regulation 56
56. (1) A special situation fund shall only be a close-ended fund.
(2) The tenure of a special situation fund, which shall not be less than three (3) years, shall be disclosed in the placement memorandum.
(2) The tenure of a special situation fund may be extended up to two (2) years, subject to approval of two-thirds (2/3rd) of the investors by value of their investment in the scheme.
(3) Further extension to the tenure of a special situation fund beyond the two (2) years period shall be subject to express consent of the willing investors and exit opportunity being made available to the dissenting investors.
(3) A special situation fund shall be constituted in IFSC as a company or LLP or Trust or any other form as may be permitted by the Authority under the applicable laws of India.
Statutory text — Principal Regulations, 2025 (as amended to 30 January 2026), consolidated where amended. The notified Gazette text prevails. Tap a highlighted word for how it functions.
3
Exceptions and conditions
Taken from the wording of this provision — the carve-outs and conditions worth reading closely.
(2) The tenure of a special situation fund may be extended up to two (2) years, subject to approval of two-thirds (2/3rd) of the investors by value of their investment in the scheme
(3) Further extension to the tenure of a special situation fund beyond the two (2) years period shall be subject to express consent of the willing investors and exit opportunity being made available to the dissenting investors
4
What this means in practice
Compliance actions
- Applies to
- Special Situation Fund
- Frequency
- At launch; event-driven
- Evidence
- PM tenure disclosure; investor approval records
5
Where it connects
Read alongside
6
Check yourself
Quiz Centre
Test yourself on Regulation 56
4 questions in the unified bank test this regulation. Each explains every option and cites the provision.
A Special Situation Fund must be:
7
Your notes
→ Next
Work with Prashant Kumar
A question on Regulation 56 for your FME?
Nature and Structure of Scheme: get advice on how it applies to your structure, scheme or filing.
›
Special Situation Funds