SEBI Updates InvIT Regulations: Key Amendments You Should Know – 2025

The Securities and Exchange Board of India (SEBI) has recently introduced vital amendments to the SEBI (Infrastructure Investment Trusts) Regulations, 2014, via the Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2025. These new regulations, effective from April 2, 2025, aim to improve governance, accountability, and flexibility in infrastructure investment structures.

As a leading law firm in Hyderabad, we at Malathi Associates closely track regulatory developments to help our clients stay compliant and well-informed. Below is a detailed overview of the major updates under the InvIT Amendment Regulations, 2025.

1. Expanded Responsibilities for Trustees

SEBI has revised Regulation 9 to introduce Sub-regulation 23, which significantly expands the scope of duties for trustees. Trustees are now required to:

• Conduct thorough due diligence of investments and assets,

• Maintain high standards of governance,

• Protect the interests of unitholders as a top priority.

A comprehensive list of trustee responsibilities has also been inserted in Schedule X. Note that Regulation 9(23) will take effect 180 days from the notification date.

2. Inter-se Transfer of Locked-in Units

In a move to enhance flexibility, Regulation 12(5) now allows inter-se transfers of locked-in units among sponsors or their group entities. However, such units must continue to adhere to the remaining lock-in period under Regulation 12.

Additionally, SEBI has allowed transfers between outgoing and incoming sponsors, provided all regulatory conditions are met.

3. Investments in Unlisted Equity Shares

Previously, InvITs could only invest in listed equity shares of companies with at least 80% of operating income derived from infrastructure. Now, as per the revised Regulation 18(5)(b):

• InvITs that raised funds through public issues can also invest in unlisted equity shares of exclusive project managers or service providers,

• The entire shareholding of such companies must be held by the InvIT directly or indirectly.

This amendment promotes smoother operations and aligns with real-world infrastructure project needs.

4. Handling Board Vacancies for Investment Managers

To ensure continued governance, SEBI has amended Regulation 4(2)(e)(v) to specify time frames for filling independent director vacancies on the board of the investment manager. A similar change has been made under Regulation 26H(1), which now mandates:

• A minimum of 6 board members, including at least one woman independent director.

This update underscores SEBI’s push for board diversity and corporate governance.

Final Thoughts

These amendments mark a significant step in strengthening the governance framework for InvITs. While the increased responsibilities for trustees may raise concerns about liability, they are crucial for building investor trust and enhancing transparency.

At Malathi Associates, a trusted law firm with deep regulatory expertise and a strong presence as a law firm in Hyderabad, we guide businesses and investors through the complexities of SEBI regulations, including compliance, dispute resolution, and strategic advisory.

If you need expert legal support related to SEBI, InvITs, or corporate governance, reach out to our team today.