Regulation 12 - Rights and responsibilities of sponsor(s) and sponsor group(s) - Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014

Rights and responsibilities of sponsor(s) 13 [and sponsor group(s)] 12. (1) The sponsor(s) 14 [ and sponsor group(s) ] shall set up the InvIT and appoint the trustees of the InvIT. (2) The sponsor(s) 15 [ and sponsor group(s) ] shall transfer or undertake to transfer to the InvIT, its entire shareholding or interest 1 [and rights] in the 2 [holdco and/ or] SPV or ownership of the infrastructure projects, subject to a binding agreement and adequate disclosures in the offer document or placement memorandum, prior to allotment of units of the InvIT: Provided that this shall not apply to the extent of any mandatory holding of shares or interest 3 [and rights] in the 4 [holdco and/ or] SPV by the sponsor(s) 15 [ and sponsor group(s) ] as per any Act or regulations or circulars or guidelines of government or any regulatory authority or concession agreement. 16 [ (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 this 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 the unitholders through 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 units of the InvIT after 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 twenty-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: ] Provided 8 [further] that in case of PPP projects 9 [where the InvIT is investing in infrastructure assets through SPV(s)], in case such acquiring or holding is disallowed by government or under any provisions of the concession agreement or any other such agreement, (i) the sponsor may continue to maintain such holding at the SPV level; (ii) the consolidated value of all such holdings at the SPV level and the value of the units of InvIT held by the sponsor shall not be less than the value of 10 [fifteen] per cent. of the total units of the InvIT after initial issue of units on a post-issue basis; (iii) such units of the InvIT and shares or interest in the SPV shall be held for a period of not less than three years from the date of the listing of units of the InvIT; (iv) in case such holding of sponsor in the SPV results in the InvIT not having controlling interest and not having more than fifty 11 [one] per cent. shareholding or interest in the SPV, the sponsor shall enter into a binding agreement with the InvIT to ensure that decisions taken by the sponsor including voting with respect to the SPV are in compliance with these regulations and not against the interest of the InvITs or the unit holders and shall be subject to further guidelines as may be specified by the Board. 17 [ (3A) The sponsor(s) and 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 units 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 year from the date of 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 as 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 compliance of requirements under clauses (i) to (iv) of this sub-regulation 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-regulation: Provided further that for InvITs that have already issued units 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 regulation 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. ] 18 [ **** ] 20 [ (4) For the purpose of calculating the minimum unitholding requirements as mentioned in sub-regulations (3) and (3A) above, subordinate units shall not be considered in computing total outstanding units of the InvIT. *(4A) Subordinate units shall not be eligible for meeting the minimum unitholding requirement as mentioned in sub-regulations (3) and (3A) above. ] 19 [ (5) The units required to be held in terms of sub-regulation (3) and (3A) shall be locked in and shall not be encumbered: 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 Securities and Exchange Board of India (Infrastructure Investment Trusts) (Second Amendment) Regulations, 2023, may continue if the encumbrance exist on such date. ] ************ NOTES:- * Original sr. no. (5) marked as (4A) as per the updated regulation on the site of Securities and Exchange Board of India, since the subseqent regulation was inserted again as (5), therefore, to avoid confusion. 1 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2018, w.e.f. 10.04.2018. 2 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 3 Inserted by the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2018, w.e.f. 10.04.2018. 4 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 5 Substituted twenty five Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 6 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 7 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 8 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 9 Inserted Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 10 Substituted twenty five by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 11 Inserted by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 12 Substituted twenty five by Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2016, w.e.f 30.11.2016 13. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 14. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 15. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 16. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 before it was read as, (3) With respect to holding of units in the InvIT, the sponsor(s) together shall hold not less than 5 [fifteen] per cent. of the total units of the InvIT after initial offer of units, on a post-issue basis for a period of not less than 3 years from the date of the listing of such units 6 [, subject to the following]: 7 [ (i) sponsor(s) would be responsible for all acts, omissions and representations/covenants of the InvIT related to formation of InvIT, sale/ transfer of assets/holdco/SPV to the InvIT. (ii) the InvIT/the trustee of the InvIT shall also have recourse against the Sponsor for any breach in this regard. (iii) 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 the unit-holders through the Trustee: Provided that the condition as specified at sub clause (iii) above shall not be applicable where the sponsor(s) together hold not less than twenty five per cent. of the total units of the InvIT after initial offer of units, on a post-issue basis for a period of not less than 3 years from the date of the listing of such units.] 17. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 18. Omitted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 before it was read as, (4) Any holding by sponsor in InvIT, exceeding 12 [fifteen] per cent. on a post issue basis, shall be held for a period of not less than one year from the date of listing of such units. 19. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/145 dated 16-08-2023 20. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/182 dated 27-05-2024