SEBI Introduces ‘Stewardship Code’ for Infrastructure Investment Trusts

Notification No. SEBI/LAD-NRO/GN/2023/145., Dated 16.08.2023

The SEBI has notified amendment in SEBI (Infrastructure Investment Trusts) Regulations, 2014. Regulation 2(1)(sa) & (zxc) has been introduced defining ‘group entities of the Investment Manager’ and ‘sponsor group’.

Also, the unitholder holding not less than 10 % of the total outstanding units of the InvIT, either individually or collectively, shall be entitled to nominate one director on the board of directors of the Investment Manager.

Further, Regulation 3A has been introduced defining the holding norms for the sponsors and sponsors group. The sponsors and sponsor groups shall collectively hold not less than:

1. 5 % of the total outstanding units of the InvIT, from the beginning of the fourth year and till the end of the fifth year from the date of listing of the units issued in the initial offer.
2. 3 % of the total outstanding units of the InvIT, from the beginning of the sixth year and till the end of the tenth year from the date of listing of the units issued in the initial offer.
3. 2 % of the total outstanding units of the InvIT, from the beginning of the eleventh year and till the end of the twentieth year from the date of listing of the units issued in the initial offer.
4. 1 % of the total outstanding units of the InvIT, after the completion of the twentieth year from the date of listing of units issued in the initial offer.

Also, the Stewardship Code under Schedule VIII has been introduced for compliance by certain unitholders. The code shall be applicable to the unitholder holding 10% of the total outstanding units of the InvIT. Some of the principles of the stewardship code which need to be complied with are as follows:

1. They must act in the best interests of the InvIT and its unitholders as a whole.
2. They should formulate a comprehensive policy on the discharge of their stewardship responsibilities and review and update the same periodically.
3. They should have a policy to manage issues of conflict of interest while fulfilling their stewardship responsibilities.
4. They should have a policy on voting.

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