Consultation paper for Disclosure of financial information in offer document/placement memorandum and for Valuation in respect of SEBI (Infrastructure investment trusts) Regulations, 2014

A. Background

1.1 . The SEBI (Infrastructure investment trusts) Regulations, 2014 (InvIT Regulations) were notified on September 26, 2014, thereby providing a regulatory framework for registration and regulation of InvITs in India. The regulations, inter alia, prescribe conditions for making a public offer and private placement and broad guidelines for making initial and continuous disclosures including disclosures of financials of the InvIT. However, in order to enable investors to make well-informed investment decisions, timely, adequate and accurate disclosure of financial results on a periodical basis is critical. At the same time, it is important to ensure comparability, uniformity and parity in disclosures made by such entities.

1.2. InvIT regulations inter-alia provide for broad guidelines for an InvIT w.r.t. compliance with accounting norms to be followed at the time of the initial offering as well as continuous disclosures to be complied with by the Infrastructure investment trusts (InvITs). However, specific requirements including the preparation of accounts, formats etc. are being discussed.

1.3. In view of the same, a Committee was constituted, consisting of representatives from the Institute of Chartered Accountants of India and the industry, with the objective of prescribing accounting and auditing norms for InvITs. The committee worked in sub-groups and gave its recommendations on the following:

a Guidelines for financial disclosures in offer document/placement memorandum

b Continuous disclosures as per Listing Requirements

c Valuation of the units of InvIT

d Net Distributable Cash Flows (NDCFs)

1.4. A separate concept paper, dealing with the Continuous disclosures as per Listing Requirements and Net Distributable Cash Flows (NDCFs), has already been placed on SEBI website for public comments on June 15, 2016.

The present consultation paper proposes a framework for disclosures in offer document/placement memorandum and for Valuation of the units of InvIT.

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