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TMI BlogDisclosure of financial information in offer document/placement memorandum for InvITsX X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 4. This Circular is available on SEBI website at www.sebi.gov.in under the categories Legal Framework and under the drop down Circulars . Yours faithfully, Richa G. Agarwal Deputy General Manager Investment Management Department Tel No.022-2644 9596 Email id - [email protected] Annexure - A Financial information to be disclosed in offer document/placement memorandum (A) Financial Information of InvIT: The financial information, to be disclosed in the offer document/placement memorandum, shall comply with the following: 1. Period of financial information to be disclosed: 1.1. The offer document / placement memorandum shall contain financial information for a period of last three completed financial years immediately preceding the date of offer document / placement memorandum. 1.2. If the closing date of the last completed financial year falls more than six months before the date of offer document / placement memorandum, then the InvIT shall also disclose interim financial information, in addition to the three year financial information referred in para 1.1.above. The said interim financial info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed after making the following adjustments, wherever applicable and wherever quantification is possible: (a) Adjustments/rectifications for all incorrect accounting practices or failures to make provisions or other matters which resulted in modified opinion(s) or modification(s) to the opinion in the auditor s report. Modified opinion(s), where quantification is not possible and which have not been adjusted, shall be highlighted along with the management comments. If the impact of above adjustments/ rectifications is not considered ascertainable, then a statement to that effect shall be given by the auditors. (b) Material amounts relating to adjustments for prior period errors/items (as discussed in Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors ) shall be identified and adjusted in arriving at the profits of the years to which they relate. (c) Where there has been a change in accounting policy, the profits or losses/incomes or expenditures of the earlier years (required to be disclosed in the offer document/ placement memorandum) and of the year in which the change in the accounting policy has taken place shall be recomputed to reflect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changes in the contingent liabilities from the aforementioned date of latest financial information to the date of the offer document / placement memorandum, the details of such changes shall be disclosed in the offer document / placement memorandum. 4.3. Commitments: (a) A statement of InvIT s Commitments, if any, as on the date of latest financial information disclosed in the offer document/placement memorandum, shall be disclosed. (b) If there are any material changes in the commitments from the aforementioned date of latest financial information to the date of the offer document / placement memorandum, the details of such changes shall be disclosed in the offer document / placement memorandum. 4.4. Related party pransactions: (a) For the related parties as defined in the InvIT regulations, the InvIT shall provide relevant disclosures of all related party transactions in compliance with the requirements of Ind AS 24 - Related Party Disclosures . (b) In addition to the disclosures required as per Ind AS 24, the following additional disclosures related to Related parties and Related party transactions shall also be included: i. Details of related party and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vIT as per the InvIT regulations. The auditor, so appointed, shall be the one who has subjected itself to the peer review process of the Institute of Chartered Accountants of India (ICAI) and who holds a valid certificate issued by the Peer Review Board of ICAI. (b) In providing his report, the auditor shall be guided by the requirements of the Guidance Note on Reports in Company Prospectuses , issued by ICAI, to the extent applicable. (c) In particular, the reports of the auditors on the financial statements of the various InvIT assets (whether prepared in accordance with the framework applicable to such InvIT assets or the framework applicable to the InvIT) for the respective periods covered in the period of three years and the interim period, if any, will have to be taken into consideration and the same shall be relied upon by the auditor giving the final report. For the audit procedures to be followed in such case, the auditor shall be guided by the procedures stated in the Standard on Auditing (SA) 600, Using the Work of another Auditor , to the extent applicable. Further, the fact that the financial statements audited by other auditors have been relied upon shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtification, the auditor shall be guided by the requirements of SAE 3400 for The Examination of Prospective Financial Information and any other relevant standards/directions issued by ICAI in this context. 5. Further, the aforesaid projections (including the underlying assumptions and calculations) shall also be certified by the Investment Manager. (C) Management Discussion and Analysis of InvIT s operations 1. InvIT shall prepare and disclose Management Discussion and Analysis (MDA) (by the Investment Manager), based on the financial statements. A comparison shall be provided for the most recent financial information with financial information of previous two years. 2. MDA shall, inter-alia contain the following : Overview of the business of the InvIT A summary of the financial information containing significant items of income and expenditure. Factors that may affect results of the operations, key risks and mitigating factors Quality of earnings and revenue streams Significant developments subsequent to the last financial year: A statement by the Investment Manager whether in their opinion there have arisen any circumstances since the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sponsor(s) 1. An offer document/placement memorandum of InvIT shall include summary of the audited consolidated financial statements (including the Balance Sheet and Statement of Profit and Loss (without schedules)) of Investment Manager and Sponsor(s) for past three completed years, prepared in accordance with accounting standards, as applicable, as per the Companies Act, 2013 and rules thereunder. For example, if the concerned entity is required to follow Companies (Accounting Standards) Rules, 2006 during the entire period of last three years, then the three year financial information of such entity shall be prepared in accordance with Companies (Accounting Standards) Rules, 2006. Similarly, if the concerned entity is required to follow Companies (Indian Accounting Standards) Rules, 2015 during the entire period of last three years, then the three year financial information shall be prepared in accordance with Companies (Indian Accounting Standards) Rules, 2015. 2. In case the Investment Manager and/or Sponsor(s) has/have done a transition from Companies (Accounting Standards) Rules, 2006 to Companies (Indian Accounting Standards) Rules, 2015 at any time during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutable Cash Flows (NDCFs): 1. Every InvIT/Investment Manager shall define net distributable cash flows (NDCFs) for itself and the definition as decided by InvIT/Investment manager shall be: a. subject to compliance with Companies Act, 2013 or Limited Liability Partnership Act, 2008, or any Central Government Act, as applicable; and b. disclosed in offer document and shall be followed consistently pursuant to listing. 2. The indicated framework shall be followed in so far as whatever is applicable to the SPV/InvIT, for e.g. the sale of infrastructure assets under SPV may not be possible under certain kind of concession agreements and therefore such head under distribution may be kept blank, etc. 3. InvIT may take guidance from the following framework for defining and calculating NDCFs at the SPV level and at the InvIT level : (I.) Calculation of Net Distributable Cash Flows at the SPV level: Description Amount Profit after tax as per Statement of profit and loss/income and expenditure (standalone) (A) Xx Add: Depreciation and amortisation as per Statement of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributable transaction costs proceeds reinvested or planned to be reinvested as per para 18 (7) (a) of the InvIT Regulations xx Add: Proceeds from sale of Infrastructure Assets or equity shares or interest in SPV not distributed pursuant to an earlier plan to re-invest, if such proceeds are not intended to be invested subsequently xx Add/less: Any other item of non-cash expense / non cash income (net of actual cash flows for these items), if deemed necessary by the Investment Manager. For example, any decrease/increase in carrying amount of an asset or of a liability recognised in Statement of profit and loss/income and expenditure on measurement of the asset or the liability at fair value, interest cost as per effective interest rate method, deferred tax, lease rents recognised on a straight line basis, etc. xx Less: Repayment of external debt (principal) / redeemable preference shares / debentures, etc., if deemed necessary by the Investment Manager xx Total Adjustments (B) xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases where one or more of the underlying InvIT assets have been held by the sponsor or its associates or its group entities for a period lesser than the last three completed financial years, then such assets may be reflected in the Combined Financial Statements only from the date of holding by such entity. However, if the discrete financial information for such assets is also available for the pre-holding period (i.e. the period before the acquisition by the sponsor or its associates or its group entities), then such assets shall be reflected in the Combined Financial Statements for such pre-holding period as well. v. If there are any assets for which the financial information is considered for a period lesser than three years and the additional interim period, if any, then such fact shall be clearly disclosed in the offer document/placement memorandum, along with all pertinent details. vi. Assumptions made in preparation of the Combined Financial Statements shall be disclosed in Basis of Preparation of such statements. vii. The basis of preparation shall also explain the principles of combination and elimination of transactions amongst entities that are included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsive income VII. Additional line items (if applicable) a) Items that will not be reclassified to profit or loss b) Income tax relating to items that will not be reclassified to profit or loss c) Items that will be reclassified to profit or loss d) Income tax relating to items that will be reclassified to profit or loss VIII. Total comprehensive income for the period (V+VI) (Comprising profit (loss) and Other comprehensive income for the period) 1.3. Line items for the Statement of changes in Unit holders equity I. Total comprehensive income for the period; II. For each component of unit holders equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately (as a minimum) disclosing changes resulting from: a) Profit or loss; b) Other comprehensive income; c) Aggregate amount of investments by unit holders in InvIT, and dividends / other distributions by InvIT to unit holders 1.4. Line items for the Cash Flow Statement Cash Flow Statement, shall be prepared in accordance with the requirements of Ind AS 7- Statement of Cash Flows . 1.5. Line items for Statement of Net Assets at Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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