SEBI releases Infrastructure Investment Trusts (Amendment) Regulations, 2023 [Read Notification]

The Securities and Exchange Board of India ( SEBI ) released the Securities and Exchange Board of India ( Infrastructure Investment Trusts ) ( Amendment ) Regulations, 2023 and amended the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, including the insertion of a new Chapter VIB regarding the Obligations of the Investment Managers and insertion of Schedule VII regarding Governance norms. The notification shall come into force with effect from 14th February 2023.

The following are the key highlights of the notification:

The definitions of “Independent director”, “Senior Management” have been inserted in Regulation 2.

Regulation 10 mentions the rights and responsibilities of an Investment Manager (‘IM’) and sub-regulation 6A has been inserted which provides that the IM cannot appoint or re-appoint an individual as auditor for more than 1 term of 5 consecutive years or any audit firm for more than 2 terms of 5 consecutive years.

Regulation 13 specifies the rights and responsibilities of the valuer and auditor and a new sub-regulation has been inserted which says that the auditor will have to undertake a limited review of the audit of all the entities or companies whose accounts are to be consolidated with the accounts of the Infrastructure Investment Trust (InvIT).

Infrastructure investment trusts are investment instruments that work like mutual funds and are regulated by the Securities and Exchange Board of India. Abbreviated as InvITs, their units are listed on different trading platforms like stock exchanges and are a wholesome combination of both equity and debt instruments.

Regulation 18 lays down the investment conditions and dividend policy whereby a new sub-regulation has been inserted stating that in case any amount remains unclaimed or unpaid out of the distributions declared by an InvIT will be transferred to “Investor Protection and Education Fund”.

Chapter VIB has been inserted which provides the ‘Obligations of the Investment Managers’. This chapter lays down the following:

• Additional requirements for constituting the Board;
• Vigil mechanism which will be formulated by the IM;
• Secretarial Compliance Report will be submitted by the IM within 60 days from the end of each financial year;
• The Quarterly Compliance Report on Corporate governance will also be submitted by the IM within 21 days from the end of each quarter.

Schedule VII has also been inserted which lays down the Governance Norms for:

• Part A- Minimum information to be placed before Board of Directors of the IM
• Part B- Compliance Certificate

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