Summary: Public listing requires an InvIT to examine whether its existing legal structure, historical compliance record and governance arrangements are suitable for operation as a public InvIT before preparation of the offer document begins. The first step is identifying the appropriate route, since an IPO and conversion of a privately listed InvIT involve different preparatory requirements. For an IPO, eligibility under Regulation 14 must be assessed, while private-to-public conversion is governed by the applicable conversion framework, including the requirements under Chapter 14 of SEBI’s Master Circular and SEBI’s August 8, 2025 circular aligning the procedure and disclosures with the follow-on-offer framework. The compliance team must then review the trust deed, arrangements among the sponsor, trustee, investment manager and project manager, ownership and control of holding companies and SPVs, and contractual restrictions affecting underlying infrastructure assets. Historical unit issuances, distributions, acquisitions, disposals, borrowings, valuations, related-party transactions, regulatory filings, litigation, defaults and investor grievances should also be examined and supporting records organised in a central data room. Governance arrangements must additionally be aligned with the requirements applicable to public InvITs, including board composition, independence, committees and internal approval processes. Identifying gaps at this stage provides time to obtain contractual consents, rectify compliance issues, restructure arrangements and implement governance changes before filing.
Preparing an InvIT for Public Listing: Is the Existing Structure Ready?
Introduction:
The changing market and regulatory environment has made public listing increasingly relevant for InvITs. However, deciding to list and being ready to list are two different things. Before an InvIT begins preparing the offer document, the compliance team must first examine whether its existing structure, historical record and governance arrangements are suitable for a public InvIT.
This first stage of preparedness matters because several issues may require amendments, approvals, consents, or rectification before the public-issue process can move ahead.
- 1. Start by identifying the correct route to public listing
- 2. Examine whether the existing structure is suitable for a public InvIT
- Oversight of contractual arrangements
- 3. Review historical compliance and resolve outstanding issues
- 4. Align the governance structure with public InvIT requirements
- Conclusion
1. Start by identifying the correct route to public listing
The first step is to identify the route to public listing, as the preparatory requirements differ for an IPO and conversion of a privately listed InvIT.
For an IPO, eligibility under Regulation 14 of the InvIT Regulations must be assessed, along with the readiness of the asset portfolio, governance structure and financial information.
Whereas, for conversion of a privately listed InvIT, SEBI’s circular dated August 8, 2025 aligns the issue procedure and disclosure requirements with the follow-on-offer framework. In addition, paragraph 14.3 of the Master Circular prescribes additional eligibility conditions relating to asset requirements, historical listing and disclosure compliance, distributions and approval of 75% of unitholders by value. The compliance team must also examine whether existing investor rights, such as preferential rights, veto rights and transfer restrictions, require modification before conversion.
The method of public listing must therefore be decided at the outset, as it determines the scope of the preparatory exercise, approvals, documentation and applicable compliance requirements.
2. Examine whether the existing structure is suitable for a public InvIT
Once the listing route is identified, the compliance team must examine the existing legal and operational structure of the trust. The review should begin with the trust deed, registration conditions and agreements governing the sponsor, trustee, investment manager and project manager. Regulations 9, 10 and 11 of the InvIT Regulations prescribe the responsibilities of the trustee, investment manager and project manager, respectively. The compliance team must examine whether the agreements among these parties clearly reflect their respective responsibilities and whether the arrangements followed in practice are consistent with those agreements.
The review must then extend to the holding companies, SPVs and underlying infrastructure assets. Regulation 18 sets out the investment conditions applicable to InvITs, including requirements for investments in infrastructure projects through holding companies and SPVs. Accordingly, the compliance team must verify whether the existing ownership structure, control arrangements and rights over the underlying assets satisfy the applicable conditions.
This exercise becomes particularly important where the InvIT has acquired projects subject to contractual restrictions or third-party rights.
Oversight of contractual arrangements
The compliance team should examine whether the proposed listing has any implications under the material contracts executed by the trust or its underlying entities. For example, a concession agreement may contain restrictions on changes in shareholding or control of the concessionaire SPV. A financing
agreement may require prior lender consent for a change in ownership or creation of additional security. Similarly, a shareholders’ agreement in case of an SPV or HoldCo may provide a minority investor with veto rights over important decisions.
The compliance team must identify such provisions and determine whether the proposed transaction triggers any consent, amendment or approval requirement. Identifying such issues early is important because contractual approvals may require negotiations with lenders, government authorities or other parties and may not be obtainable immediately before filing.
3. Review historical compliance and resolve outstanding issues
After examining the structure, the compliance team must establish whether the InvIT’s historical records can support the information proposed to be included in the offer document. This requires examining records relating to the trust, holding companies, SPVs and underlying assets. The review should cover historical unit issuances, allotments, transfers, distributions, acquisitions, disposals, borrowings, valuations, regulatory filings and approvals.
For example, where the InvIT has acquired an SPV from its sponsor, the compliance team should verify the acquisition agreement, valuation report, applicable approvals, consideration paid and related disclosures.
Such transactions must also be examined from a related party perspective. Regulation 19 of the InvIT Regulations requires related-party transactions to be undertaken on an arm’s-length basis and in the best interests of unitholders, subject to the applicable approval and disclosure requirements. Accordingly, the compliance team must verify whether historical related-party transactions were properly identified, approved and disclosed.
The review should also cover litigation, show-cause notices, regulatory orders, investor grievances and outstanding defaults. Historical compliance becomes especially important in private-to-public conversion. Under paragraph 14.3 of the Master Circular, the InvIT must satisfy specified conditions relating to its compliance with listing obligations and distributions during the period since listing or the preceding three years, whichever is shorter.
For example, if a privately listed InvIT has received stock-exchange notices for delayed disclosures, the compliance team must examine the nature of the defaults, their status and their implications for conversion eligibility. The framework expressly provides that the imposition of only monetary fines by stock exchanges does not, by itself, make the InvIT ineligible.
Similarly, distribution records should be reconciled with the declared distribution policy, financial statements, unitholder records and actual payment information.
A central data room should be maintained to organise the supporting documents and identify missing records. Any gaps requiring rectification, additional disclosure or regulatory clarification should be identified before the offer-document preparation reaches its final stage.
4. Align the governance structure with public InvIT requirements
Once the legal and historical position is established, the next step is to examine whether the governance arrangements meet the requirements applicable to the proposed public structure.
Chapter VIB of the InvIT Regulations provides the corporate governance framework for InvITs. Regulation 26G makes specified provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 applicable to InvITs with necessary modifications, while Regulation
26H prescribes additional governance requirements, including requirements relating to the board of directors of the investment manager.
The compliance team must therefore examine the composition of the investment manager’s board, independence requirements, constitution of committees and other applicable governance obligations.
However, governance readiness does not end with appointing directors and constituting committees. The board and its committees must have access to appropriate information and clearly defined responsibilities for matters such as related-party transactions, borrowings, valuations, acquisitions, disposals and distributions.
For example, if the InvIT proposes to acquire a project from its sponsor, the internal process must clearly identify who reviews the proposed transaction, who examines the valuation and related-party implications, which approvals are required and who is responsible for ensuring that the necessary disclosures are made.
Similarly, responsibilities must be clearly divided among the trustee, investment manager, project manager and underlying SPVs.
The reporting and approval arrangements recorded in the trust deed and other agreements must also be consistent with the procedures followed in practice.
Any changes required in board composition, committee structure, delegation of authority or internal policies should be implemented sufficiently before filing so that the revised governance structure is operational when the offer-related documents are considered.
Conclusion
The first stage of public-listing preparedness is therefore to understand the InvIT as it exists today – its listing route, legal structure, contractual arrangements, historical compliance and governance framework. These are the areas where issues may require time for rectification, consent or restructuring and should therefore be examined before the transaction process advances.
Once this foundation is clear, the compliance team can move to the next stage: ensuring that the InvIT has the financial, reporting and disclosure systems required to operate as a public-market platform.
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The article is written by CS Rutuja M Umadikar
