The regulations set out how InvITs are registered and regulated, and they define the terms that decide which infrastructure projects an InvIT can take on. This article explains the main definitions found in the opening part of the text.
What are these regulations?
The Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 lay down a framework for Infrastructure Investment Trusts, along with their registration and regulation. They came into force on the date they were notified in the Official Gazette.
Which projects can an InvIT take on?
The regulations use the term "eligible infrastructure project". Before it is acquired by, or transferred to, an InvIT, a project must meet certain conditions that depend on whether it is a public-private partnership (PPP) project.
- PPP projects: the project must be a completed and revenue generating project, or one that has reached its commercial operations date but has less than one year of revenue history, or a pre-COD project.
- Non-PPP projects: the project must have all the approvals and certifications needed to begin construction.
What is a "completed and revenue generating" project?
Before its acquisition by or transfer to the InvIT, such a project must meet three tests:
- It has reached the commercial operations date under the relevant project agreement, such as a concession agreement or power purchase agreement, or under an agreement with lenders.
- It has received every approval and certification needed to start operations.
- It has been earning revenue from operations for at least one year.
A concession agreement is an agreement between a person and a concessioning authority for carrying out the project. The concessioning authority is the public sector authority in PPP projects.
What changed in the definition of "change in control"?
The definition was substituted by an amendment in 2023, effective 1 April 2023. Under the current wording:
- For a company or body corporate, a change in control is judged by the meaning of "control" in the Companies Act, 2013.
- In any other case, it means a change in the controlling interest. This is a direct or indirect interest of more than fifty percent of voting rights or interest.
The footnotes also show that a 2016 amendment, effective 30 November 2016, reworded the term "associate". It now refers to an associate company under the Companies Act, 2013 or applicable accounting standards, and it covers entities that control or are controlled by a person, promoters, and relatives of an individual.
Other terms defined
- Bonus issue: additional units given to unit holders on the record date, at no cost to them.
- Follow-on offer: an offer of InvIT units to the public for subscription, including an offer for sale by an existing unit holder.
- Designated stock exchange: the recognised stock exchange, chosen by the InvIT, where units are or will be listed for a particular issue. If some exchanges have nationwide trading terminals, the InvIT must pick one of them. It may pick a different exchange for a later issue.
- Employee unit option scheme: a scheme under which the investment manager grants unit options to its employees through an employee benefit trust.
Who is affected, and what should readers do?
The definitions matter mainly to InvIT sponsors, investment managers and advisers, and to investors in InvIT units. Ordinary readers need not take any action.
Frequently asked questions
Does a project need a revenue track record to qualify?
Not always. A PPP project may qualify as a completed and revenue generating project with at least one year of revenue. It may also qualify if it has reached its commercial operations date without that history, or if it is a pre-COD project.
Do the same rules apply to non-PPP projects?
No. For non-PPP projects the condition is that the project has received all approvals and certifications needed to start construction.
What does "amended up to 16 October 2026" mean?
It means the published text includes all amendments made up to that date. Footnotes in the document record earlier amendments and their effective dates.