Sebi Issues Stricter Financial Disclosure Norms For Reits, InvITs - Here’s What Has Changed

The Securities and Exchange Board of India (Sebi) has issued stricter financial disclosure norms for the offer documents issued by Real Estate Investment Trusts (Reits) and Infrastructure Investment Trusts (InvITs). Under the new guidelines, effective immediately, the regulator said that Reits and InvITs are now required to disclose “certified proforma” financial statements in new offer documents if they have acquired or divested any material asset after its last reported financials. The regulator mandated that these disclosure must show the financial impact of those transactions.

Sebi said, these financial statements must cover at least the last completed financial year and any stub period, if the most recent results are more than six months old.

If any Reit or InviT has been operating for less than three years, it only needs to disclose financials for the time it has existed, plus any stub period, the regulator clarified. For the initial offers, the audited combined financial statements of the REIT and InvIT should be disclosed in the offer document or placement memorandum.

For listed Reits and InvITs, Sebi has mandated them to submit quarterly and year-to-date financial results withing 45 days to the exchanges. Reits and InvITs are required to submit the annual results within 60 days of the end of the financial year.

Here’s What Else Sebi Mandated

• Both Reits and InvITs must provide a "Statement of Net Assets at Fair Value" and a "Statement of Total Returns at Fair Value," with property-wise or project-wise breakdowns.

• For related party transacton, both Reits and InvITs are required to disclose valuation reports and financing details.

• The regulator has mandated that contingent liabilities and commitments are now required to be disclosed, with regular updates provided on any material changes.

• For follow-on offers, REITs and InvITs will need to provide a summary of financials for any assets acquired, along with valuation reports. They must also disclose any regulatory actions or settlements involving sponsors or managers.

• Sebi requires Reits and InvITs to have active websites that are regularly updated with financial information, grievance redressal details, and unit holding patterns.