Consultation paper for Amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014


Posted June 23, 2016 by nexriseconsultancy

SEBI has issued consultation paper for amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014.

 
SEBI has issued consultation paper for amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014. The issues, the changes proposed and accordingly the proposals are laid for the following:

[b]Restriction on SPVs to invest in other SPV’s :[/b]

Removing the restriction on the SPV (only in case of such SPV being a Holding Company) to invest in other SPVs holding the assets subject to certain conditions

[b]Mandatory sponsor holding in InvIT:[/b]

[b]Option 1:[/b] Sponsor(s) of the InvIT would hold not less than 10% of the total units of the InvIT on a post-issue basis subject to conditions

[b]Option 2:[/b] The sponsor would divest upto 85% subject to the terms of the concession agreement under arrangements

[b]Increase the number of sponsors from 3 to 5 :[/b]

[b]Option 1:[/b] If the sponsor holds not less than 25% of the total units of the InvIT after initial offer of units, on a post-issue basis for a period of not less than 3 years from the date of the listing, then the number of sponsors may be increased from 3 to 5.

[b]Option 2:[/b] if the sponsor (s) chooses not to hold 25% of the total units of the InvIT after initial offer of units, on a post-issue basis (i.e. either of the options finalized at para II above) then the maximum number of sponsors shall remain at 3.

[b]Approval of related party transactions by the unit holders:[/b]

For the purpose of regulation 22(3) and 22(4), the matter shall be approved if the votes cast by the unit holders in favor of the proposal shall be more than the number of votes cast by the unit holders against it where currently it is required the approval of 60% of the unit holders, apart from related parties, for passing related party transactions that are procedural in nature.

For the purpose of regulation 22(5), the matter shall be approved if the votes cast by the unit holders in favor of the proposal shall be at least one and half times more than the number of votes cast by the unit holders against it where currently it requires approval of 75% of the unit holders, apart from related parties, for passing of special resolutions such as change in investment manager, investment strategy, delisting of units, etc

Further, in both the above cases, the voting by any person, who is a related party in such transaction, as well as associates of such person(s) shall not be taken into account.

[b]Aligning minimum public holding requirement with SCRR :[/b]

It is proposed to align the same with the requirements as under Securities Contracts (Regulation) Rules, 1957 (SCRR). Therefore the requirement of minimum offer to public and minimum public holding, of the outstanding units, shall be linked with the requirement of public offer of 25%/10%, as specified under Rule 19(2)(b)and 19A of the Securities Contracts (Regulation) Rules, 1957.

[b]Eligibility Criteria for Investment Manager:[/b]

Those Investment Managers, which do not have atleast 5 years prior experience, would be allowed subject to the condition that sponsors have at least 5 years of experience in fund management or advisory services or auditing services or development in the infrastructure sector (similar to what has been allowed for sponsor) subject to the condition that sponsor is an associate of investment manager.

[b]Responsibilities of the Trustee and its associate:[/b]

[b]Associates of the Trustees would not form a part of the parties to the InvIT.[/b]

Associates of Trustees would be allowed to invest in units of the InvIT in which it is designated as Trustee, subject to such transactions being conducted at an arm’s length basis.

The disclosure of litigations of associates of Trustee as per Schedule III and Schedule IV of the InvIT regulations, may not be required.

[b]Allowing InvIT to lend to the underlying SPVs :[/b]

InvIT regulations may be amended to allow lending. However, the same may be restricted to only the SPVs in which the InvIT has invested, subject to other conditions as deemed necessary as against current regulations where regulations doesn't allow the InvIT to undertake lending to any person.

[b]Operational aspects :[/b]

Filing of only Project Management Agreement at the time of filing the offer document
Liability of the unit holders: Unit-holder is an investor and his rights and obligations are limited to the amount of his investment in the units of InvITs
-- END ---
Share Facebook Twitter
Print Friendly and PDF DisclaimerReport Abuse
Contact Email [email protected]
Issued By NexRise Consultancy
Website NexRise Consultancy Services
Business Address Office No - 8, 1st Floor, 17 Bab Genu Road, Anand Bhavan, Kalbadevi Road, Mumbai-400002, India.
Country India
Categories Accounting
Tags accounting services , bookkeeping services , chartered accountant services
Last Updated June 23, 2016