SEBI proposes aligning financials disclosure requirements for REITs, InvITs with ICDR and LODR Regulations

Investor-protection proposals include removing the option to disclose condensed financial statements in the offer document and on continuous basis post listing.

The market regulator has proposed aligning the disclosure requirements for financial results of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in line public issue regulations (ICDR Regulations) and listing regulations (LODR Regulations).

ICDR Regulations is SEBI (Issue of Capital and Disclosure Requirements) Regulations and LODR Regulations is SEBI (Listing Obligations and Disclosure Requirements Regulations). The market regulator's proposal to align the disclosures of REITs and InvITs to these norms are one of the few suggested in a consulation paper floated on February 14.

In a consultation paper, the Securities and Exchange Board of India (SEBI) has proposed various changes to disclosure norms regarding financial information in the offer document/placement memorandum of REITs and InvITs, and to continuous disclosure and compliances by REITs and InvITs.

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As the consultation paper said, "The Working Group on Ease of Doing Business 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. "

The changes have been suggested based on the report submitted by the Working Group, inputs of Indian RETIs Association and Bharat InvITs Association, recommendations of the HySAC and internal deliberations.

The changes cover ease-of-doing-business (EoDB) and investor-protection measures.

EoDB proposals include aligning the period of disclosure of financial statements in the offer document with ICDR Regulations; disclosure of combined financial statements in the offer document/placement memorandum for initial offer, irrespective of the period for which the REIT/InvIT was in existence; and framework for calculation of net distributable cash flows.

Investor-protection proposals include removing the option to disclose condensed financial statements in the offer document and on continuous basis post listing in line with ICDR Regulations and LODR Regulations; disclosures in offer document for a follow on offer; mandating disclosure of Net Borrowings Ratio as part of financial results along with format for its disclosure; and mandating disclosure of certain financial ratios for REIT/InvIT with any outstanding borrowings.