In exercise of the powers conferred under section 30 read with sections 11 and 12 of the Securities and Exchange Board of India Act

5304 GI/202 3 (1) रजिस्ट्री सं. डी.एल.- 33004/99 REGD. No . D. L. -33004/99 EXTRAORDINARY PART III—Section 4 PUBLISHED BY AUTHORITY No. 580] NEW DELHI, THURS DAY , AUGUST 1 7, 2023/ SHRAVANA 26, 1945 CG-MH-E-18082023-248176 SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 16th August, 2023 SECURITIES AND EXCHANGE BOARD OF INDIA (INFRASTRUC TURE INVESTMENT TRUSTS) (SECOND AMENDMENT) REGULATIONS, 2023 No. SEBI/LAD -NRO/GN/2023/145 .—In exercise of the powers conferred under section 30 read with sections 11 and 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board her eby makes the following regulations to further amend the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, namely: – 1. These regulations may be called the Securities and Exchange Board of India (Infrastructure Inve stment Trusts) (Second Amendment) Regulations, 2023. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Infras tructure Investment Trusts) Regulations, 2014, ─ I. in regulation 2, sub -regulation (1), i. the existing clause (sa) shall be renumbered as clause (sb) and the existing clause (sb) as clause (sc); ii. after clause (s ), the following clause shall be inserted, namely, - “(sa) “group entities of the Investment Manager” means: (i) entities or person(s) which are controlled by the Investment Manager; (ii) entities or person(s) who control the Investment Manager; (iii) entities or person (s) which are controlled by entities or person(s) specified in sub-clause (ii).” iii. in clause (saa), in sub -clause (ii), after the word “associate” and before the symbol “;”, the words “or a member of the sponsor group of the InvIT” shall be inserted; iv. in clau se (zk), the words and symbols “sponsor(s)” shall be substituted by the words “sponsor groups”; v. the existing clause (zxa) shall be renumbered as clause (zxb); vi. after clause (zx), the following clause shall be inserted, namely, - “(zxa) “Self -Sponsored Inves tment Manager” means the Investment Manager of an InvIT who has dual responsibilities of both the Investment Manager as well as the sponsor;” vii. after clause (zxb), the following clause shall be inserted, namely, - “(zxc) “sponsor group” includes - (i) the sponsor (s); (ii) entities or person(s) which are controlled by such sponsor; (iii) entities or person(s) who control such body corporate; (iv) entities or person(s) which are controlled by entities or person(s) specified in clause (iii).” II. in regulation 4, in sub -regulation (2), - i. in clause (d), in sub -clause (i), after the word s “each sponsor” and before the words “shall be”, the words “and sponsor group” shall be inserted; ii. in clause (d), after sub -clause (i), the following provisos shall be inserted namely, - “Provided that, for each sponsor group not less than one perso n shall be identified as a sponsor: Provided further that of the entities categorized as sponsor group, only the following entities may be considered: a) a person or entity who is directly or indirectly holding a n interest or shareholding in any of the asse ts or SPVs or holdco(s) proposed to be transferred to the InvIT; b) a person or entity who is directly or indirectly holding units of the InvIT on post - issue basis; c) a person or entity whose experience is bei ng utilized by the sponsor for meeting with the eligibility conditions required under sub -clause (iii) of clause (d) of sub -regulation (2) of regulation 4 of these regulations.” iii. in clause (h), - a. the symbol “;” after the word “units” in the non -obstante clause shall be replaced with the symbol “:”; b. the following provisos shall be inserted after the existing non -obstante clause, namely, - “Provided that unitholder(s) holding not less than ten percent of the total outstanding units of the InvIT, either individually or collectively, sh all be entitled to nominate one director on the board of directors of the Investment Manager, in the manner as may be s pecified by the Board: Provided further that the director so nominated shall recuse from voting on any transaction where such nominee dir ector or associate of such nominee director or the unitholder who nominated such nominee director or associate of such unitholder is a party: Provided further that any unitholder holding not less than ten percent of the total outstanding units of the InvIT shall comply with stewardship code specified in Schedule VIII of these regulations.” III. regulation 7A shall be omitted. IV. in regulation 12, - i. in the heading, after the words and symbols “sponsor(s)”, the words and symbols “and sponsor group(s)” shall be inser ted; ii. in sub -regulation (1), after the words and symbols “sponsor(s)”, the words and symbols “and sponsor group(s)” s hall be inserted; iii. in sub -regulation (2), after the words and symbols “sponsor(s)”, wherever appearing, the words and symbols “and sponsor gr oup(s)” shall be inserted; iv. the existing sub -regulation (3), clauses (i) -(iii) thereunder and the first proviso to cl ause (iii) shall be substituted by the following, namely, - “(3) The sponsor(s) and sponsor group(s) shall, at all times, collectively hold not less than fifteen percent of the total outstanding units of the InvIT, for three years from the date of listing of units in the initial offer, subject to the following: a) sponsor(s) and sponsor group(s) would be responsible for all acts, omissions, representations and covenants of the InvIT related to the formation of InvIT or sale or transfer of assets/holdco/SPV to the InvIT; b) the InvIT or the trustee of the InvIT shall also have recourse against the sponsor(s) and sponsor group(s) for any breach in thi s regard; c) project manager of the InvIT shall be the sponsor or an associate of the sponsor and shall continue to act in such capacity for a period of minimum three years from the date of listing of InvIT units unless suitable replacement is appointed by th e unitholders thro ugh the Trustee: Provided that the condition as specified in clause (c) of this sub -regulation shall not be applicable where the sponsor(s) and sponsor group(s) together hold not less than twenty -five percent of the total outstanding unit s of the InvIT aft er initial offer of units, at all times, during a period of first 3 years from the date of the listing of units issued in initial offer: Provided further that any holding by sponsor and sponsor group exceeding the fifteen percent or twent y-five percent, as the case may be, shall be held for a period of not less than one year from the date of listing of units issued in initial offer:” after sub -regulation (3), the following sub -regulation and the provisos shall be inserted namely, - “(3A) The sponsor(s) an d sponsor group(s) shall collectively hold not less than - (i) five percent of the total outstanding units of the InvIT, from the beginning of fourth year and till the end of fifth year from the date of listing of the units issued in the initial offer; (ii) three percent of the total outstanding units of the InvIT, from the beginning of sixth year and till the end of tenth year from the date of listing of the units issued in the initial offer; (iii)two percent of the total outstanding unit s of the InvIT, from the beginning of eleventh year and till the end of twentieth year from the date of listing of the units issued in the initial offer; (iv)one percent of the total outstanding units of the InvIT, after the completion of the twentieth yea r from the date o f listing of units issued in the initial offer: Provided that the maximum value of units to be held by sponsor(s) and sponsor group(s) for compliance with clauses (i) to (iv) shall not exceed five hundred crore rupees or such other value a s may be decided by the Board from time to time and such valuation shall be based on the latest available net asset value of the of the InvIT: Provided further that an assessment of complianc e of requirements under clauses (i) to (iv) of this sub -regulatio n shall be done at the time of each fresh issuance of units and at the beginning of change in threshold of the percentage for minimum unitholding requirement as specified in this sub -regulati on: Provided further that for InvITs that have already issued uni ts pursuant to an initial offer as on the date of coming into effect of the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Second Amendment) Regulations, 2023 , the provisions contained in sub - regulation (3) and (3A) of this regu lation shall be applicable only for the additional units issued by the InvIT after such date and the units that are locked in at the time of initial offer shall continue to be locked in till the completion of three years from the date of listing of units in such initial offer.” v. sub-regulation 4 shall be omitted. vi. after sub -regulation 4, the following sub -regulation shall be inserted namely, - “(5) The units required to be held in terms of su b-regulation (3) and (3A) shall be locked in and shall not be encumb ered: Notwithstanding the above, any encumbrance created on units held to comply with the minimum unit holding requirement applicable before the date of coming into effect of the Securiti es and Exchange Board of India (Infrastructure Investment Trusts) (Se cond Amendment) Regulations, 2023, may continue if the encumbrance exist on such date .” V. in regulation 22, - i. in sub -regulation (4), clause (fa) shall be omitted; ii. in sub -regulation (7), - a) after the words “inducted sponsor” and before the symbols “, -”, the w ords “or conversion to Self -Sponsored Investment Manager” shall be inserted; b) in clause (b), after sub -clause (ii), the following sub -clause shall be inserted, namely, - “(iii) in case of conversion to Self -Sponsored Investment Manager, the Investment Manag er shall provide the dissenting unit holders an option to exit by buying thei r units in the manner specified by the Board;” iii. after sub -regulation (7), the following sub -regulation shall be inserted namely, - “(8) The existing sponsor(s) proposing to disasso ciate as sponsor(s) by seeking to convert the Investment Manager to Self -Spon sored Investment Manager shall comply with the following conditions: (i) the InvIT has been listed for a period of at least five years; (ii) the InvIT has undertaken not less than twelve distributions on a continuous basis and has complied with the distribution no rms as per these Regulations in the preceding five years; (iii) the InvIT is rated AAA by a registered credit rating agency for a continuous period of five years immediately preceding t he exit of the sponsor; (iv) during the period of preceding five years, the InvIT has not breached, at any time, the maximum leverage thresholds specified in these regulations; (v) the Investment Manager is meeting the net worth criteria specified for the sponsor i n these regulations; (vi) the minimum unitholding requirement applicable to sponso r(s) and sponsor group(s) shall be complied with, on or after the date of conversion of the Investment Manager to Self -Sponsored Investment Manager, by the Investment Manager, sha reholders of the Investment Manager and/or group entities of Investment Manag er; Explanation: Investment Manager, shareholders of the Investment Manager and/or group entities of Investment Manager may acquire units of the InvIT for the purpose of complianc e of above condition. (vii) the sponsor(s) or its associate(s) do not own or contro l the Investment Manager of the InvIT on or after the date of conversion of the Investment Manager to Self - Sponsored Investment Manager; (viii) the sponsor has not transferred / sold ass ets to the InvIT in the last three years and no assets/ projects shall be acq uired by the InvIT from the outgoing sponsor(s) for a period of one year from the date of conversion to Self -Sponsored Investment Manager; (ix) at least one of the sponsor(s) proposing to disassociate should have been a sponsor of the InvIT for a minimum period of five years; (x) the InvIT shall not have any under -construction assets acquired from the sponsor that have not commenced commercial operations; (xi) the sponsor(s) or its associate(s) are not the Project Manager and do not own or control the Project Manager on or after the date of conversion of the Investment Manager to Self -Sponsored Investment Manager; (xii) unitholders approval in terms of sub -regulation (7) of this regulation and consent of the Trustee has been obtained for conversion to Self -Sponsored Investment Manager; (xiii) such other conditions as may be specified by the Board.” VI. in Schedule I, paragraph 1, in sub -paragraph (c), after the words “their associates” , and before the words “or tr ustee”, the words and symbols “or sponsor group(s)” shall be inserted; VII. in Schedule III, paragraph 13, in sub -paragraph (c) after the words “associates” and before the words “and the trustee”, the words and symbols “, sponsor gr oup(s)” shall be inserted; VIII. in Schedule IV, in Part -A, in paragraph 17, after the words “associates” and before the words “and the Trustee”, the words and symbols “, sponsor group(s)” shall be inserted; IX. after Schedule VII, the following Schedule shall be in serted namely, - “Schedule VIII : STEWARDSHIP CODE [See Regulation 4(2)(h)] The following principles of stewardship code shall be complied with by any unitholder holding not less than ten percent of the total outstanding units of the InvIT: 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 stewardsh ip responsibilities and review and update the same periodically; 3. They should have a policy to manage issues of conflict of interest whil e fulfilling their stewardship responsibilities; 4. They should periodically monitor the InvIT and its investee entities v iz. HoldCo(s) and SPV(s); 5. They should have a policy on intervention in the InvIT and its HoldCo(s) and SPV(s); 6. They should have a policy on voting.” BABITHA RAYUDU , Executive Director [ADVT. -III/4/Exty./ 362/2023 -24] Footnotes: 1. The Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 was published in the Gazette of India on Sep tember 26, 2014 vide No. LAD -NRO/GN/2014 -15/10/1577. 2. The Securities and Exch ange Board of India (Infrastructure Investment Trusts) Regulations, 2014 was subsequently amended by the – a. Securities and Exchange Board of India (Infrastructure Investment Trusts ) (Amendment) Regulations, 2016, vide No. SEBI/LAD/NRO/GN/2016 -17/021, with e ffect from November 30, 2016. b. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2017, vide No. SEBI/LAD -NRO/GN/2017 -18/024, with e ffect from December 15, 2017. c. Securities and Exchange Board of India (Infrast ructure Investment Trusts) (Amendment) Regulations, 2018, vide No. SEBI/LAD -NRO/GN/2018/07, with effect from April 10, 2018. d. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2019, vide No. SEBI/LAD -NRO/GN/2 019/10, with effect from April 22, 2019. e. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2020, vide No. SEBI/LAD -NRO/GN/2020/05, with effect from March 02, 2020. f. Securities and Exchange Board of India (Reg ulatory Sandbox) (Amendment) Regulations, 2020, vide No. SEBI/LAD -NRO/GN/2020/10, with effect from April 17, 2020. g. Securities and Exchange Board of India (Infrastructure Investmen t Trusts) (Second Amendment) Regulations, 2020 vide No. SEBI/LAD -NRO/GN/2020/15, with effect from June 16, 2020. h. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regu lations, 2021 vide No. SEBI/LAD -NRO/GN/2021/27, with effect from July 30, 2021. i. Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2021 vide No. SEBI/LAD -NRO/GN/2021/30, with effect from August 31, 2021. j. Securities and Exc hange Board of India (Infrastructure Investment Trust s) (Amendment) Regulations, 2022 vide No. SEBI/LAD -NRO/GN/2022/83, with effect from May 4, 2022. k. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Second Amendment) Regulations, 2022 vide No. SEBI/LAD -NRO/GN/2022/101 with effect fr om January 1, 2023. l. Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2023 vide No. SEBI/LAD -NRO/GN/2023/122 with effect from February 14, 2023. m. Securit ies and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 vide No. SEBI/LAD –NRO/GN/2023/137 with effect from July 4, 2023. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri , New Delhi -110064 and Published by the Controller of Public ations, Delhi -110054.