Consultation Paper- Continuous disclosures to be made by Infrastructure Investment Trusts registered under the SEBI (Infrastructure Investment Trusts) Regulations, 2014
1. Real estate and infrastructure sectors are considered to be the two most fundamental sectors for the growth of any economy. They contribute to the economy directly by creating employment opportunities and stimulating demand, and indirectly by facilitating the growth of industries along such developments. Therefore, it can be seen that growth in the real estate or infrastructure has a multiplier effect on the general economy of any nation.
2. The Government of India’s announcement of REITs and InvITs in the Union Budget 2014-2015 has been hailed as a potential game changing event for these sectors.
3. The SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT regulations) were notified on September 26, 2014. SEBI had also issued a circular dated May 11, 2016 prescribing guidelines for public issue of units of InvITs.
4. InvIT regulations, inter-alia, provide for initial listing requirements and certain continuous listing requirements to be complied with by the InvITs. The following continuous disclosures are outlined in the InvIT regulations itself:
i. Investment conditions and dividend policy
ii. Related party transactions
iii. Borrowings and deferred payments
iv. Valuation of assets
v. Rights and meetings of unit holders
vi. Certain disclosures with respect of price sensitive information
5. Regulation 23(2) of the InvIT regulations provide that a publicly offered InvIT shall ensure that the disclosures in the offer document are in accordance with the Schedule III of these regulations and any circulars or guidelines issued by the SEBI in this regard. In view of the same, it is proposed to provide certain additional disclosures (continuous financial disclosures and other continuous disclosures) to be made by the InvITs.
6. SEBI had constituted a committee comprising of members from the real estate and infrastructure industry, stock exchanges, investment banks, audit firm and law firm, which evaluated the continuous obligations under the InvIT regulations and under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2014 (LODR Regulations). Further, another committee was also constituted by SEBI to evaluate the accounting norms for InvITs. The combined proposals, of both the above committees, is contained in this consultation paper.
