SEBI puts in place disclosure norm for InvITs

Putting in place disclosure norms for Infrastructure Investment Trusts (InvITs), Sebi on Thursday said the offer document will contain financial information, related party transactions and past performances.

The move comes after the board of Sebi last month decided to further relax InvITs norms in a bid to make these instruments more attractive for raising capital.

Sebi had notified InvIT Regulations in 2014, allowing the setting up and listing of such Trusts, which are very popular in some advanced markets.

However, no single Trust has been set up as yet, as investors wanted further measures, including tax breaks to make these instruments more attractive. SEBI has granted approval to IRB Infrastructure, GMR and MEP Infrastructure to launch InvITs.

In a circular issued on Thursday, SEBI said that offer document would contain financial information of last three financial years. These include balance sheet, statements of profit and loss, income and expenditure, net assets and total returns.

Also, InvIT will have to disclose about commitments, contingent liabilities, earnings per unit, total debt, net worth, and the debt/equity ratios before and after the completions of issue.

The Trust would have to make a statement about history of interest and principal payments of InvIT and operating cash flow from the projects for the last three years and interim period, if any.

With regard to related party transactions, SEBI said InvIT would have to provide relevant disclosures of all related party transactions like details of related party and its relationship with InvIT, nature and value of transaction.

In case of any related party transaction involving acquisition or disposal of an InvIT asset, the Trust would have to inform about summary of valuation report, material conditions or obligations in relation to the transactions, and commissions received by any associate of the related party in relation to the transaction.

It needs to provide a statement including history of interest and principal payments of InvIT would also be disclosed for past three years and interim period, if any.

“The offer document/placement memorandum shall contain disclosures of the projections of revenues and operating cash flows of the InvIT, project-wise, over the next three years including related assumptions,” Sebi said in a circular.

InvIT would have to prepare and disclose Management Discussion and Analysis by the Investment Manager, based on the financial statements. A comparison need to be provided for the most recent financial information with previous two years.

A statement from Investment Manager regarding sufficiency of the working capital to fulfil the present requirements of InvIT — at least 12 months from date of listing would have to be disclosed in the offer document.


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