Putting in place disclosure norms for Infrastructure Investment Trusts (InvITs), Sebi today said the offer document will contain financial information, related party transactions and past performances.
The move comes after the board of Sebi last month decided to further relax InvITs norms in a bid to make these instruments more attractive for raising capital.
Sebi had notified InvIT Regulations in 2014, allowing the setting up and listing of such Trusts, which are very popular in some advanced markets.
However, no single Trust has been set up as yet as investors wanted further measures, including tax breaks, to make these instruments more attractive. Sebi has granted approval to IRB Infrastructure, GMR and MEP Infrastructure to launch InvITs.
In a circular issued today, Sebi said that offer document would contain financial information of last three financial years. These include balance sheet, statements of profit and loss, income and expenditure, net assets and total returns.
Also, InvIT will have to disclose about commitments, contingent liabilities, earnings per unit, total debt, net worth, and the debt/equity ratios before and after the completions of issue.
The Trust would have to make a statement about history of interest and principal payments of InvIT and operating cash flow from the projects for the last three years and interim period, if any.
With regard to related party transactions, Sebi said InvIT would have to provide relevant disclosures of all related party transactions like details of related party and its relationship with InvIT, nature and value of transaction.
In case of any related party transaction involving acquisition or disposal of an InvIT asset, the Trust would have to inform about summary of valuation report, material conditions or obligations in relation to the transactions, and commissions received by any associate of the related party in relation to the transaction.
It needs to provide a statement including history of interest and principal payments of InvIT would also be disclosed for past three years and interim period, if any.
"The offer document/placement memorandum shall contain disclosures of the projections of revenues and operating cash flows of the InvIT, project-wise, over the next three years including related assumptions," Sebi said in a circular.
InvIT would have to prepare and disclose Management Discussion and Analysis by the Investment Manager, based on the financial statements. A comparison need to be provided for the most recent financial information with previous two years.
A statement from Investment Manager regarding sufficiency of the working capital to fulfil the present requirements of InvIT -- at least 12 months from date of listing would have to be disclosed in the offer document.
In case sufficient working capital is not available in the
opinion of Investment Manager, then a statement should be provided describing how it proposes to provide additional working capital requirement.
In case of a capital offering subsequent to the initial offer, the market value of the units traded on all the stock exchanges where InvIT is listed would have to be disclosed.
InvITs will have to make disclosures about content and basis of preparation of financial information, which would be in accordance with Indian Accounting Standards, Sebi said.
InvITs will have to inform about the framework for calculation of net distributable cash flows and such cash flows at the SPV and consolidated level, it said.
An offer document of InvIT would include summary of the audited consolidated financial statements (including the Balance Sheet and Statement of Profit and Loss of Investment Manager and Sponsor for past three years, prepared in accordance with accounting standards.
"Further, if any of the Investment Manager/Sponsor is a foreign entity and is not legally required to comply with the Companies Act, 2013, then the financial statements of such entity may be prepared in accordance with International Financial Reporting Standards (IFRS)," Sebi noted.
