A. Background:
1) SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT regulations) were notified on 26th September, 2014, thereby providing a regulatory framework for registration and regulation of InvITs in India. The regulations, inter alia, prescribe conditions for making a public offer and private placement, initial and continuous disclosures, investment conditions, unit-holder approval requirements, related party disclosures, etc.
2) Pursuant to the notification of InvIT regulations, representations and suggestions were received from various market participants for making changes to the said regulations. Based on the recommendations received, a consultation paper proposing amendments to InvIT regulations was issued seeking public comments on August 20, 2015. The aforesaid paper dealt with certain issues which have been taken up again in this consultation paper to insert certain additional conditions, based on feedback received from all stakeholders viz. government, market participants, industry associations, regulatory bodies, etc.
3) Apart from the above, based on the feedback received from the aforesaid stakeholders, the paper also proposes certain other amendments.
B. The issues and the proposals for amendment are as under:
I. Removing the restriction on the SPV (only in case of such SPV being a Holding Company) to invest in other SPVs holding the assets.
a) Current regulatory requirement: Regulation 2(1)(zy) of InvIT Regulations, inter alia states that a SPV is a company or LLP, which holds not less than ninety per cent of its assets directly in infrastructure projects and does not invest in other SPVs.
b) Request for change: It has been represented that infrastructure assets in India are usually held through different Special Purpose Vehicles (SPVs), where the promoters of such SPVs create separate holding companies (HoldCo) which in turn hold stake in the multiple SPVs which have infrastructure projects under them. Thus, it has been
