TaxTMI 
TaxTMI 
Review of - (a) disclosure of financial information in offer document / placement memorandum, and (b) continuous disclosures and compliances by Infrastructure Investment Trusts (InvITs)
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....he InvITs, post listing of units. 2. The Working Group for review of compliance requirements for REITs and InvITs, constituted under the aegis of Hybrid Securities and Advisory Committee (HySAC), submitted its report on Ease of Doing Business recommendations for REITs and InvITs. 3. Based on the report of the Working Group, inputs of Bharat InvITs Association, recommendations of the HySAC and internal deliberations, Chapter 3 and Chapter 4 of the Master Circular shall stand revised and the revised chapters are placed at Annexure A. 4. Further, Paragraph 7 of Annexure - 5 of the Master Circular shall be substituted with the following: "7. Financials: a) Disclosure as per clauses 11(a) to 11(c) and 11(e) to 11(f) of the Schedule III of the InvIT Regulations: Provided if the InvIT has undertaken any acquisition or divestment of any material asset(s) after the latest period for which financial information is disclosed in the letter of offer but before the date of filing of the letter of offer, the certified proforma financial statements shall be disclosed for at least the period covering last completed financial year and the stub period, if any. The ....
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....changes. c) Summary of the audited financial statements of the assets proposed to be acquired for the previous three years and the stub period (if available). Provided that in cases where the general purpose financial statement of the assets being acquired are not available, combined / carved-out financial statements for those assets shall be prepared in accordance with Guidance Note issued by the ICAI from time to time. The combined / carved-out financial statements shall be audited by the auditor of the seller in accordance with applicable framework. d) If the InvIT has been in existence for a period lesser than the last three completed financial years, then disclosure as per clause (a) above may be provided for such financial years for which the InvIT has been in existence and for the stub period (if applicable)." 6. This circular shall be applicable with immediate effect except for the requirements specified under Chapter 4 which shall be applicable for disclosure of financial information for the period beginning on or after April 01, 2025. 7. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Excha....
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....he InvIT shall be disclosed in the offer document / placement memorandum. The principles for preparation of combined financial statements are discussed in Section '(G)' below. 3.2.2. In case of a follow-on offer, audited consolidated financial statements of the InvIT shall be disclosed in the offer document. The separate audited financial statements of the InvIT shall be disclosed on the InvIT's website and the link to InvIT's separate financial statements shall be specified in the offer document. 3.2.3. In case of a follow-on offer, if the InvIT has undertaken any acquisition or divestment of any material assets after the latest period for which the financial information is disclosed in the offer document but before the date of filing of the offer document, the certified proforma financial statements of the InvIT shall be disclosed for at least the period covering last completed financial year and the stub period, if any. The principles for preparation and certification of proforma financial statements are discussed in Section '(H)' below. 3.3. Content and basis of preparation of financial information 3.3.1. The ....
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....ject manager), investment management fees (including fees paid to investment manager), trustee fee, custodian fees, registration fees, repairs and maintenance in case of infrastructure asset and profit/loss on sale of assets/investments shall be disclosed separately in the notes. e) Statement of Cash Flows: The Statement of Cash Flows shall be prepared under the 'indirect method' as prescribed in Indian Accounting Standard 7 - 'Statement of Cash Flows' mandated under section 133 of the Companies Act, 2013. f) Headings, line items, sub-line items and sub-totals may be presented as an addition or substitution on the face of the financial statements when such presentation is relevant to an understanding of an InvIT's financial position or performance or to cater to industry/sector-specific disclosure requirements or when required for compliance with the InvIT regulations or Indian Accounting Standards or any other law. g) The reference to the following terms made in Schedule III, shall, for the purpose of this chapter, be construed as follows, unless otherwise required: Reference to To be construed as Board of directors Board ....
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....ll be recomputed based on the latest accounting policy applicable to reflect what the profits or losses/incomes or expenditures of those years would have been if a uniform accounting policy was followed in each of these years in accordance with the requirement of Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors. d) If any accounting policy followed in past was not in compliance with applicable laws and/or accounting standards, the financial statements shall be adjusted and recomputed in accordance with correct accounting policies. e) The Balance Sheet shall be prepared after deducting the balance outstanding on Revaluation reserve account from both Fixed assets and Reserves and the Net worth should be arrived at after such deductions. 3.3.8. Financial statements shall disclose all 'material' items, i.e., the items if they can, individually or collectively, influence the economic decisions made on the basis of the financial statements. Materiality shall be judged and determined by the Investment Manager depending upon pertinent facts and circumstances, including the size or nature of the item or a combination of both. ....
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....all be provided ● Summary of valuation report; ● Material conditions or obligations in relation to the transaction; ● Rate of interest, if external financing has been obtained for the transaction/acquisition; and ● Any fees or commissions received or to be received by any associate of the related party in relation to the transaction. 3.4.5. Capitalisation statement An InvIT shall disclose a Capitalisation Statement showing total debt, net worth, and the debt/equity ratios before and after the completions of issue. An illustrative format of the Capitalisation Statement is specified hereunder: Particulars Pre-issue as at .... As adjusted for issue (Amount) Total Debt XX XX Unit holders' Funds Unit Capital XX XX Xx XX XX XX XX XX Reserves XX XX Further, in case of follow-on offer, if there is any change in the Unit Capital (since the date from which the financial information has been disclosed in the offer document/placement memorandum), a note explaining the nature of the change shall be given. ....
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....t. However, in case of initial offer, the 'Statement of Net Assets at Fair Value' shall be provided only as on the last date of the financial information disclosed in the offer document / placement memorandum. 3.4.8. Statement of Total Returns at Fair Value a) The line items for the 'Statement of Total Return at Fair Value', shall, at minimum, include the following: Particulars Amount Total Comprehensive Income (As per the Statement of Profit and loss) XXXX Add/Less: Other Changes in Fair Value (e.g., in investment property, property, plant & equipment (if cost model is followed)) not recognized in Total Comprehensive Income XXXX Total Return XXXX b) In case of follow-on offer, the 'Statement of Total Returns at Fair Value' shall be provided for the period of the financial information disclosed in the offer document. However, in case of initial offer, the 'Statement of Total Returns at Fair Value' shall be provided only for the last completed year and stub period, if any. 3.5. Audit of Financial Information: 3.5.1. The financial information shall be audited and the following shall b....
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..... the statement of profit and loss gives a true and fair view of the InvIT's profits or losses for the years/periods ended at the balance sheet dates; iii. the statement of cash flow gives a true and fair view of the cash movements of the InvIT for the years/periods ended at the balance sheet dates; and iv. the statement of changes in unit holders' equity gives a true and fair view of the movement of the unit holders funds for the years/periods ended at the balance sheet dates; (B) Projections of InvIT's Revenues and Operating Cash flows 3.6. The offer document / placement memorandum shall contain disclosures of the projections of revenues and operating cash flows of the InvIT including related assumptions, project-wise, for the next three financial years and for the current financial year (i.e. the financial year in which the offer document / placement memorandum is filed with the Board). For the current financial year, the breakup of amount shall be given in the notes to projections as (a) Actual, and (b) Projection. 3.7. In case of initial offer, the projections shall be disclosed for InvIT assets/projects that are proposed to b....
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....lated party transaction(s) involving acquisition or disposal of an InvIT asset ● The analysis shall discuss impact of such acquisition/disposal on the yield of the units of InvIT ● An analysis of reasons for the changes in significant items of income and expenditure shall also be given, inter alia, containing the following: ● unusual or infrequent events or transaction; ● significant economic changes that materially affected or are likely to affect income from continuing operations; ● known trends or uncertainties that have had or are expected to have a material adverse impact on revenues from continuing operations; ● future changes in relationship between costs and revenues, in case of events such as future increase in operating costs that will cause a material change are known; ● total turnover from each major segments of the InvIT ● status of any publicly announced new business segment; ● the extent to which business is seasonal; ● any significant dependence on a single or few suppliers or customers; ● competitive co....
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....ies (Indian Accounting Standards) Rules, 2015. 3.17.In case the Investment Manager and/or Sponsor(s) has/have done a transition from Companies (Accounting Standards) Rules, 2021 to Companies (Indian Accounting Standards) Rules, 2015 at any time during the period of last three years, then the financial information for the last three years shall be disclosed on the following basis: a) If the concerned entity is following or is required to follow Companies (Indian Accounting Standards) Rules, 2015 for the latest two years (for the latest three years including comparatives of the first year of adoption) out of last three completed years, then the financial information for all the three years shall be prepared as per Companies (Indian Accounting Standards) Rules, 2015. b) If the concerned entity is following or is required to follow Companies (Indian Accounting Standards) Rules, 2015 only for the latest year (for the latest two years including comparatives) out of the historical period of three years, then the financial information for the recent two years shall be disclosed as per the Companies (Indian Accounting Standards) Rules, 2015 and the financial infor....
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....s of SPVs or Investment Entity adjusted for the following ● Applicable capital gains and other taxes ● Related debts settled or due to be settled from sale proceeds ● Directly attributable transaction costs ● Proceeds reinvested or planned to be reinvested as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of the InvIT Regulations (+) Proceeds from sale of infrastructure investments, infrastructure assets or sale of shares of SPVs or Investment Entity not distributed pursuant to an earlier plan to re- invest as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of the InvIT Regulations, if such proceeds are not intended to be invested subsequently (-) Finance cost on Borrowings as per Profit and Loss Account excluding finance cost on any shareholder debt/loan from trust. The amortization of any transaction costs can be excluded provided such transaction costs have already been deducted while computing NDCF of previous period when such transaction costs were paid (-) Debt repayment (to include principal repayments as per scheduled EMI's except if refinanced thr....
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....s settled or due to be settled from sale proceeds ● Directly attributable transaction costs ● Proceeds reinvested or planned to be reinvested as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of the InvIT Regulations (+) Proceeds from sale of infrastructure investments, infrastructure assets or sale of shares of SPVs/ Hold cos or Investment Entity not distributed pursuant to an earlier plan to re-invest as per Regulation 18(7) of InvIT Regulations or any other relevant provisions of the InvIT Regulations, if such proceeds are not intended to be invested subsequently (-) Finance cost on Borrowings as per Profit and Loss Account. However, amortization of any transaction costs can be excluded provided such transaction costs have already been deducted while computing NDCF of previous period when such transaction costs were paid (-) Debt repayment at Trust level (to include principal repayments as per scheduled EMI's except if refinanced through new debt including overdraft facilities and to exclude any debt repayments / debt refinanced through new debt in any form or funds raised through issuance of units) (-) an....
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.... NDCF of Trust (A) 300 200 NDCF of SPV's (B) 250 250 Less: - Amount distributed by SPV's (C ) (235) (235) D = A + B -C 315 215 Max retention amount - 10% of D 31.5 21.5 Amount already retained by SPV 15 15 Max amount that can be retained by Trust 16.5 6.5 4. Surplus cash available in InvITs/HoldCos/SPVs due to: (i) 10% of NDCF withheld in line with the Regulations in any earlier year or half year or (ii) Such surplus being available in a new HoldCo/SPV on acquisition of such HoldCo/SPV by InvIT or (iii) Any other reason, excluding if such surplus cash is available due to any debt raise could be considered for distribution by the HoldCo/SPV to the InvIT/HoldCo, or by the InvIT to its Unitholders in part or in full. Also, such distribution of surplus funds shall be separately disclosed after the NDCF computation for the respective period. Provided that with regard to the point 4 (ii) above, if an acquisition of such SPV was funded by external debt, then surplus cash available with such SPV should first be used to repay such external debt. After....
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....at Trust level will not be reduced from NDCF to the extent such debt is refinanced at the HoldCo/SPV level and such proceeds from refinancing have been transferred by the HoldCo/SPV to the Trust for such debt repayment. Similarly, debt repayment at HoldCo/SPV level will not be reduced from NDCF to the extent such debt is refinanced at the Trust level and such proceeds from refinancing have been transferred by the Trust to the HoldCo/SPV for such debt repayment. 11. Investment Manager of the InvIT is required to ensure the following while making distributions: (a) The period of making distribution should be followed consistently whether on a half-yearly/quarterly/monthly basis and the same should be part of distribution policy of the InvIT which should be disclosed in the offer document, annual report and the website of InvIT. (b) The distribution policy should prescribe the frequency of the distribution. Further, for each distribution, it should be ensured that cash flows from all assets, whether held by InvIT or any of the underlying SPVs or HoldCos, are being distributed together. (c) The first distribution (whether monthly/quarterly/h....
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.... to the extent applicable. iv. In cases where one or more of the underlying InvIT assets have been held by the sponsor or its associates or its group entities for a period lesser than the last three completed financial years, then such assets may be reflected in the Combined Financial Statements only from the date of holding by such entity. However, if the discrete financial information for such assets is also available for the pre-holding period (i.e. the period before the acquisition by the sponsor or its associates or its group entities), then such assets shall be reflected in the Combined Financial Statements for such pre- holding period as well. v. If there are any assets for which the financial information is considered for a period lesser than three years and the additional stub period, if any, then such fact shall be clearly disclosed in the offer document/placement memorandum, along with all pertinent details. vi. Assumptions made in preparation of the Combined Financial Statements shall be disclosed in 'Basis of Preparation' of such statements. vii. The basis of preparation shall also explain the principles of combinati....
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....not be available for such business. In such cases, combined / carved-out financial statements for such business shall be prepared in accordance with any guidance note, standard on assurance engagement or guidelines issued by the ICAI from time to time. 3.27.Further, in case of non-material acquisitions / divestments, disclosures in relation to the fact of the acquisition / divestment, consideration paid / received and mode of financing shall be made in the offer document / placement memorandum. Further, such disclosures shall be certified by the statutory auditor of the InvIT or chartered accountants, who hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) appointed by the investment manager on behalf of the InvIT. 3.28.If the proceeds of issue are to be used for acquisition of one or more businesses or entities, the InvIT may voluntarily provide proforma financial statements to disclose the impact of such acquisition, for such financial periods as determined by the investment manager, provided such proforma financial statements are prepared in accordance with any guidance note, standard on assurance e....
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....f securities laws through the settlement mechanism of the Board in the past three years immediately preceding the date of filing of the follow-on offer document, then disclosure of such compliance of the settlement order, shall be made in the follow-on offer document. 3.33.Other Disclosures (a) History of distributions made in the last three financial years, if any (b) Summary of valuation of the infrastructure assets held by the InvIT, as specified in Clause 10(a) of Schedule III of the InvIT Regulations, shall be disclosed as per the latest available valuation report. In case of occurrence of any material change post the date of the latest available valuation report, the InvIT shall undertake a valuation of the infrastructure assets prior to filing of the follow-on offer document. 3.34. The merchant banker shall ensure that the financial information contained in the follow-on offer document and the particulars as per audited financial statements are not more than six months old from the issue opening date. Provided that InvITs which are in compliance with the InvIT Regulations and circulars issued thereunder may file unaudited financial stateme....
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....ty-one days from the date of its listing, whichever is later. 4.2. Nature and format of financial information 4.2.1. The financial information shall be disclosed on both separate as well as consolidated basis, unless otherwise specified. 4.2.2. Financial Results a) The financial results, as mentioned in paragraph 4.1.1 to 4.1.3 above, shall contain the items mentioned in the format for Statement of Profit and Loss as prescribed in Schedule III of the Companies Act, 2013 (with the exceptions and modifications mentioned in paragraph 4.5.1 of this Chapter and paragraph 3.3.3 of Chapter 3 of this Master Circular), excluding notes and detailed sub-classification. b) The financial results shall be submitted to the stock exchanges and disclosed on the InvIT's website in the following format: Particulars 3 months ended* Preceding 3 months ended * Corresponding 3 months ended previous year* Year to date figures for current period ended* Year to date figures for previous year ended* Previous year ended* (Audited / Unaudited) ** (Audited / Unaudited) ** (Audited / Unaudited) ** (Audited / Unaudited) **....
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....res are audited or unaudited. 4.2.6. Statement of Net Assets at Fair Value a) The Statement of Net Assets at Fair Value, as mentioned in paragraph 4.1.5 d) above, shall be prepared as specified in paragraph 3.4.7 of Chapter 3 of this master circular. It shall be submitted to the stock exchanges and disclosed on the InvIT's website in the following format: Particulars As at current half year end / year end date* As at Corresponding half year end / previous year end date* (Audited / Unaudited) ** (Audited) Book Value Fair Value Book Value Fair Value * in dd/mm/yyyy format ** specify whether figures are audited or unaudited b) InvITs which are not required to undertake half yearly valuation of the assets as per the InvIT Regulations shall disclose the fair value of assets as per the latest available valuation report. 4.2.7. Statement of Total Returns at Fair Value The Statement of Total Returns at Fair Value, as mentioned in paragraph 4.1.5 e) above, shall be prepared as specified in paragraph 3.4.8 of Chapter 3 of this master circular.....
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....The financial information shall be prepared on the basis of accrual accounting policy and shall be in accordance with uniform accounting practices adopted for all the periods, except if otherwise permitted under Ind AS and / or any addendum thereto as defined in Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules, 2015. 4.4.2. The financial results and the financial statements (other than annual financial statements) of the InvIT shall be prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 - Interim Financial Reporting, specified under the Companies (Indian Accounting Standards) Rules, 2015. 4.4.3. Additionally, InvITs shall also follow relevant accounting laws, as prescribed by their sectoral regulators, with respect to the projects being executed by them. HoldCos and SPVs owned by the InvIT may prepare financial statements in accordance with accounting standards and laws applicable to them. 4.4.4. In addition to the disclosure mentioned above, the InvIT may, if it so desires, also submit the financial information as per the International Financial Reporting Standards ('IFRS&....
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....Accounting Standards (Ind AS) and / or any addendum thereto as defined in Rule 2(1)(a) of the Companies (Indian Accounting Standards) Rules, 2015 to the extent not contrary to the InvIT Regulations. 4.5.5. The financial statements, other than annual financial statements, of the InvIT can be in the form of condensed financial statements prepared in compliance with the minimum requirements for condensed financial statements laid down in Indian Accounting Standard 34 - Interim Financial Reporting, specified under the Companies (Indian Accounting Standards) Rules, 2015. 4.5.6. Financial statements shall disclose all 'material' items, i.e., the items if they can, individually or collectively, influence the economic decisions made on the basis of the financial statements. For determining materiality, the InvIT shall be guided by paragraph 3.3.8 of Chapter 3 of this master circular. 4.5.7.In cases of any sale/divestment of any holding(s)/investment(s) in underlying SPV(s)/HoldCo(s) or any sale of infrastructure assets by the InvIT, the profit/loss on such transactions should be shown on a gross basis. 4.6. Additional disclosure....
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....tement on Impact of Audit Qualifications" disclosing such modified opinion(s) and the cumulative impact of the same in the format as specified in Annexure I to the SEBI Circular No. CIR/CFD/CMD/56/2016 dated May 27, 2016. With respect to the format referred in the aforementioned Circular, the reference to "Earnings per Share' and 'Management' should be construed as a reference to 'Earnings per Unit' and 'Board of Directors/Governing Body of the Investment Manager' respectively. Further, the aforementioned statement on impact of audit qualifications shall be signed by the following: ● Chairperson/CEO/MD of the Investment Manager ● CFO or the Head of the Finance of the Investment Manager ● Statutory Auditor b) If the auditor had expressed any modified opinion(s) or other reservation(s) in his audit report or limited review report in respect of the financial results of the immediately preceding financial year or half year, which had an impact on the profit or loss of that period, then the InvIT shall disclose the following: ● Brief details of the past modified opinion(s) or other ....
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....atement of Net Assets at Fair Value The 'Statement of Net Assets at Fair Value' shall be disclosed in the manner as specified in paragraph 3.4.7 of Chapter 3 of this master circular. 4.6.8.Statement of Total Returns at Fair Value The 'Statement of Total Returns at Fair Value' shall be disclosed in the manner as specified in paragraph 3.4.8 of Chapter 3 of this master circular. 4.7. Approval and authentication of financial information: Before submission of the financial information to the Stock Exchanges, the financial information shall be approved by the Board of Directors/Governing Body of the Investment Manager and shall be authenticated and signed in the following manner: 4.7.1. The financial information submitted shall be approved by the board of directors of the investment manager. Provided that while placing the financial information before the board of directors, the chief executive officer and chief financial officer of the investment manager shall certify that the financial information do not contain any false or misleading statement or figures and do not omit any material fact which may make th....
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....ended at the balance sheet dates 4.8.6. While performing limited review as required under Regulation 13(2)(e) of the InvIT Regulations, the InvIT, the statutory auditors of InvIT, the entities whose accounts are to be consolidated with the InvIT and the statutory auditors of such entities shall follow the procedure in accordance with the circular issued by the Board under Regulation 33(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to the extent applicable. (B) Financial information of Investment Manager 4.9. An InvIT shall disclose summary of the audited consolidated financial statements (including the Balance Sheet and Statement of Profit and Loss (without schedules)) of Investment Manager for the latest financial year, along with comparative figures for the immediate preceding financial year, prepared in accordance with the accounting standards and laws, as applicable for the Investment Manager, in the annual report of the InvIT. 4.10. The above information may not be disclosed if the Investment Manager's Net worth is not materially eroded (Material erosion shall be judged by the Trustees in light of various p....
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.... and their associates/r elated parties and Sponsor Group (1) Indian (a) Individuals / HUF (b) Central/State Govt. (c) Financial Institutions/B anks (d) Any Other (specify) Sub- Total (A) (1) (2) Foreign (a) Individuals (Non Resident Indians / Foreign Individuals) (b) Foreign government (c) Institutions (d) Foreign Portfolio Investors (e) Any Other (specify) ....
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....lations, shall be reviewed once a year, by the registered credit rating agency. 4.14.2. The credit rating review shall be completed annually within 30 days from the end of the financial year. Further, immediately upon completion of the credit rating review exercise and upon the receipt of the credit rating report, an intimation along with all pertinent information should be made to the Stock Exchanges. 4.15.Website of InvIT: 4.15.1.An InvIT shall maintain a functional website wherein the contents of the said website should be updated up to last 2 days and the website which should contain all the relevant information about InvIT, inter-alia, including the following: ● Details of its business; ● Financial information including complete copy of the Annual Report including Balance Sheet, Profit and Loss Account, etc .; ● Contact information of the designated officials of the company who are responsible for assisting and handling investor grievances; ● Email ID for grievance redressal and other relevant details; ● Information, report, notices, call letters, circulars, proceedings, etc. ....
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....of funds. 4.17.2. The statement(s) specified above, shall be continued to be given till such time the issue proceeds have been fully utilised or the purpose for which these proceeds were raised has been achieved. Such statement(s) shall also be placed before the Trustee and the Board of Directors/Governing Body of the Investment Manager for review. Pursuant to such review, the statement shall be submitted to the stock exchange(s). Such submission to the Stock Exchange(s) shall be made along with the submission of financial results. InvIT shall furnish an explanation for the aforementioned variation in its Annual report. 4.17.3.InvIT shall prepare an annual statement of funds utilized for purposes other than those stated in the offer document/placement memorandum or explanatory statement to the notice for the general meeting, certified by the statutory auditors of the InvIT, and place it before the before the Trustee and the Board of Directors/Governing Body of the Investment Manager till such time the money raised through the issue has been fully utilized. 4.18. Additional disclosure requirements for InvITs which have outstanding borrowings ....