In a significant move aimed at strengthening the regulatory framework for Infrastructure Investment Trusts (InvITs), the Securities and Exchange Board of India (SEBI) issued a circular on May 7, 2025, revising key disclosure and compliance requirements. The circular—addressed to all InvITs, associated parties, and recognised stock exchanges—marks a step forward in SEBI’s continuous efforts to enhance transparency, streamline operations, and improve investor confidence in InvIT structures.
Background and Context
InvITs have emerged as a crucial instrument in financing infrastructure development in India, allowing investors to participate in revenue-generating infrastructure projects. With increasing market participation, there is a growing need to ensure robust disclosure norms that safeguard investor interests while maintaining operational flexibility for the InvITs.
SEBI’s latest circular is a result of a detailed review by the Working Group on compliance for REITs and InvITs,under the Hybrid Securities and Advisory Committee (HySAC). Based on the group’s recommendations and feedback from the Bharat InvITs Association, SEBI has now revised Chapters 3 and 4 of its Master Circular for InvITs (originally issued on May 15, 2024).
Key Updates in Financial Disclosures
The core of the update revolves around improving the quality and structure of financial disclosures in offer documents, placement memoranda, and ongoing reporting
Proforma Financial Statements for Material Transactions
If an InvIT acquires or divests material assets between the latest disclosed financials and the offer/placement filing date, certified proforma financials must be disclosed for at least the last completed financial year and any stub period. These proforma statements are to be prepared and certified as per the standards outlined in Section H of Chapter 3 of the Master Circular.
Referencing Existing Public Disclosures
InvITs may incorporate relevant financial disclosures by referencing public disclosures made under SEBI regulations, including website links and stock exchange filings, thereby reducing redundancy and improving document efficiency.
Audited Financials of Acquired Assets
InvITs must provide summaries of audited financials for the assets being acquired, covering the past three years and any stub period. In cases where standard financial statements are unavailable, carved-out or combined financials prepared under ICAI guidance will be acceptable.
Considerations for Newly Established InvITs
For InvITs that have existed for fewer than three financial years, disclosures are required only for the period since their inception and the applicable stub period.
Effective Dates
While most revisions are effective immediately, the updated provisions under Chapter 4 (pertaining to continuous disclosures) will apply to financial information for periods starting on or after April 1, 2025.
Implications and Way Forward
These updates underscore SEBI’s intent to strike a balance between robust regulatory oversight and operational ease. By allowing reference-based disclosures and clarifying requirements for newer entities and recent asset acquisitions, SEBI has introduced flexibility without compromising transparency. The emphasis on proforma and carved-out statements ensures that investors get a more accurate and holistic view of the InvIT’s financial health, even amid structural changes.
As the infrastructure sector continues to be a cornerstone of India’s economic growth, regulatory clarity and investor trust are paramount. These measures by SEBI reinforce that commitment and pave the way for more efficient and investor-friendly operations in the InvIT ecosystem.
