Board approves SEBI Infrastructure Investment Trusts (INVIT) Regulations 2014
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As per notice displayed at the website of SEBI, The Board of Directors in their meeting on 10 th August, 2014 has approved the following regulations:
1. SEBI (Real Estate Investment Trusts) Regulations, 2014
2. SEBI (Infrastructure Investment Trusts) Regulations, 2014
SEBI (Infrastructure Investment Trusts) Regulations, 2014
The Board has approved the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) which provide a framework for registration and regulation of Infrastructure Investment Trusts (“InvITs”). The Salient features of the InvIT Regulations, are:
a. Infrastructure is as defined by Ministry of Finance vide its notification dated October 07, 2013 and shall include any amendments/additions made thereof.
b. InvITs shall be set up as a trust and registered with SEBI. It shall have parties such as Trustee, Sponsor(s), Investment Manager and Project Manager.
c. The trustee of an InvIT shall be a SEBI registered debenture trustee who is not an associate of the Sponsor/Manager.
d. In vITs shall invest in infrastructure projects, either directly or through SPV. In case of PPP projects, such investments shall only be through SPV.
e. A n InvIT shall hold or propose to hold controlling interest and more than 50% of the equity share capital or interest in the underlying SPV, except where the same is not possible because of a regulatory requirement/ requirement emanating from the concession agreement. In such cases sponsor shall enter into an agreement with the InvIT, to ensure that no decision taken by the sponsor,including voting decisions with respect to the SPV, are against the interest of the InvIT/ its unit holders .
f. Sponsor(s) of an InvIT shall, collectively, hold not less than 25% of the total units of the InvIT on post issue basis for a period of at least 3 years, except for the cases where a regulatory requirement/concession agreement requires the sponsor to hold a certain minimum percent in the underlying SPV. In such cases the consolidated value of such sponsor holding in the underlying SPV and in the InvIT shall not be less than the value of 25% of the value of units of InvIT on post-issue basis.
g. The proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore and the offer size of the InvIT shall not be less then Rs 250 crore at the time of initial offer of units.
h. The aggregate consolidated borrowing of the InvIT and the underlying SPVs shall never exceed 49% of the value of InvIT assets. Further, for any borrowing exceeding 25% of the value of InvIT assets, credit rating and unit holders' approval is required.
i. A n InvIT which proposes to invest at least 80% of the value of the assets in the completed and revenue generating Infrastructure assets, shall :
i. raise funds only through public issue of units.
ii. have a minimum 25% public float and at least 20 investors.
iii. have minimum subscription size and trading lot of Rs ten lakhs and Rs five lakhs respectively.
iv. distribute not less than 90% of the net distributable cash flows, subject to applicable laws, to the investors, atleast on a half yearly basis.
v. through a valuer, undertake a full valuation on a yearly basis and updation of the same on a half yearly basis and declare NAV within 15 days from the date of such valuation/updation.
j. A publicly offered InvIT may invest the remaining 20% in under construction infrastructure projects and other permissible investments, as defined in the regulations. However, the investments in under construction infrastructure projects shall not be more than 10% of the value of the assets.
k. An InvIT which proposes to invest more than 10% of the value of their assets in under construction infrastructure projects shall :
i. raise funds only through private placement from Qualified Institutional Buyers and body corporates.
ii. have minimum investment and trading lot of Rs. 1 crore .
iii. have minimum of 5 investors with each holding not more than 25% of the units
iv. distribute not less than 90% of the net distributable cash flows, subject to applicable laws, to the investors, atleast on a yearly basis
v. undertake full valuation on yearly basis and declare NAV within 15 days from the date of such valuation.
l. Conditions for InvITs investing in under construction projects
i. For PPP project(s)
1. has achieved completion of at least 50% of the construction of the infrastructure project as certified by an independent engineer; or
2. has expended not less than 50% of the total capital cost set forth in the financial package of the relevant project agreement.
ii. For Non-PPP project(s), the Infrastructure Project has received all the requisite approvals and certifications for commencing construction of the project;
m. Listing shall be mandatory for both publicly offered and privately placed InvITs and InvIT shall make continuous disclosures in terms of the listing agreement.
n. Detailed provisions for related party transactions. valuation of assets, disclosure requirements, rights of unit holders, etc. are provided in the Regulations. However, for any issue requiring unit holders approval, the voting by any person who is a related party in such transaction as well as its associates shall not be considered.
SEBI (Real Estate Investment Trusts) Regulations, 2014
Click Here >> to read the silent features of the regulation
