SEBI’s Investor Charter for InvITs—A New Era of Investor Protection and Transparency

Introduction

The Securities and Exchange Board of India (“SEBI”) has taken a major initiative in pursuing more strength in the regulatory regime of infrastructure investment by issuing a new circular dated June 12, 2025, titled Investor Charter Infrastructure Investment Trusts (“InvITs”). This is a step to promote better disclosure, strengthening of investor protection, and instil the culture of accountability in the InvIT sector. This Investor Charter will be opportune given the service transformation that has occurred lately in the Indian securities market, e.g. the introduction of the Online Dispute Resolution (“ODR”) facility and the recent modification of the SCORES 2.0 system that enables redress of investor grievances. The innovations constitute part and parcel of SEBI’s continuing drive towards onsumer protection in the financial sphere, financial inclusion and financial literacy, and these same innovations are likely to continue to enhance investor confidence in the fast-evolving infrastructure investment space in India.

The latest circular requires disseminating the Investor Charter widely by all InvITs and the Bharat InvIT Association (“BIA”), including their websites and mobile applications, as well as places of prominent offices, etc. This is to provide current as well as potential investors with easy access to important information on the rights, obligations, as well as standards of operation that are expected of InvITs. The Circular, in Annexure-A demonstrates a vision of establishing a transparent, efficient, and reliable InvIT industry and assuring strong investor protection and corporate governance. The entire circular, coupled with the elaborate Investor Charter and templates of reporting, can be examined by the citizens and can be accessed directly at https://www.sebi.gov.in/legal/circulars/jun-2025/investor-charter-infrastructure-investment-trusts-invits-_94557.html

Explanation

The Investor Charter is a detailed document which prescribes the vision of the SEBI towards the InvIT sector, that is, to provide a transparent, efficient reliable investment environment in infrastructure assets and protect and serve the interests of unitholders. The mission of the Charter is to facilitate the growth of the InvIT industry into a globally competitive industry, highest standards of corporate governance and transparency, and the enforcement of rules and regulations leading to high professional standards and high ethical standards. It further focuses on the need to suggest the practice of good business as well as professional governance of the infrastructure assets, defending the interest of investors through an excellent grievance redressal procedure.

One of the major characteristics of the Charter is that it emphasises the transparency of operations, as well as investor empowerment. InvITs must attract investments through the sale of units to investors and invest the money in infrastructure assets through holding companies or Special Purpose Vehicles (“SPVs”) or through itself in complete compliance with the SEBI regulations; thereby enabling revenue potential of long-term infrastructure in toll roads, power transmission, renewable energy, telecom towers, data centre and logistics infrastructure. The management structure of InvITs has several players, which are sponsors, trustees, investment managers and project managers, and such are professionally managed to work out best to deliver performance and returns. In further protection of the investor, the Charter prescribes that InvITs should have at least 80 per cent of their investments based on their investment portfolio in operational, revenue-earning assets. In the case of publicly traded InvITs, investments in under-construction projects are capped at up to 10 per cent of assets under management (“AUM”). Moreover, InvITs should pay a minimum of 90 per cent of net distributable cash flows to unitholders periodically, which will ensure that the investors get back in time.

The Charter also sets strict disclosure standards which bind InvITs to give periodic disclosures on their net asset value (“NAV”), acquisition and portfolio performance, financial statements, corporate governance and credit ratings. To instil transparency, annual, half-yearly and quarterly reports and independent valuation reports must be published on InvIT websites. The Charter specifies certain time limits regarding most of the investor services and disclosures. As an illustration, distribution proceeds must be brought to the account within five working days after the record date, and subscription money (based on insufficient subscription) must be refunded within 15 days after the issue closing date. The complaints made concerning the absence of annual reports or other notices have to be rectified within five days of working but the other issues have to be handled within seven to fifteen days of working, depending upon the nature of the request. Other requirements of the Charter entail timely disclosure of changes in structure, sponsor, investment manager or trustee within 24 hours of occurrence, timely reporting of financial information, valuation reports, compliance reports, and credit rating.

The Charter consists of a strong grievance redressal mechanism. All InvITs are bound to ensure that they prominently state their policy on grievance redressal by investors on their websites, including the procedure to file complaints and redress them. The investors are urged to contact the compliance officer, registrar and transfer agent (“RTA”) or investor relations personnel of the relevant InvIT first. In case there is an unsatisfactory redressal of a grievance, the investors can approach SEBI by filing complaints through the SCORES platform or the ODR mechanism, which helps in the tracking and settlement of grievances. More transparency and accountability will also be generated as InvITs will be expected to provide information on complaints regarding investors and whether they have been redressed on their websites within the 7th of consecutive months. The Charter also contains the provision of the do’s and don’t’s of the investor with particular points to note the registration status of InvITs on the SEBI portal, the conditions of reading all the documents and papers that pertain to the offer and the risks involved in infrastructure investment. It is suggested that investors must remain cautious of unsolicited investment offers and must not share important information, and in case they suspect any activities must report to SEBI. The guidelines are meant to equip the investors with knowledge and tools to make sound investment decisions as well as safeguard themselves against possible fraud.

Conclusion

The introduction of the Investor Charter of InvITs by SEBI is a major milestone in terms of regulation in the development of the infrastructure investing sector of India. To enforce investor confidence, transparency, and the sustainable nature of the InvIT ecosystem, SEBI will look to enforce thorough disclosures, standardised redressal procedures for grievances, and continuous education of investors.

The Charter harmonises the Indian InvIT framework with the international best practices in market discipline and protection of investors, and, accordingly, it can be assumed that the Charter will be of interest to more investors, both internal and international. Incorporated by the powers of Section 11(1) of the SEBI Act, 1992, the circular is one of the instances of SEBI acting proactively to protect the interests of investors and enhance a stable, well-regulated market for securities development. Because the infrastructure sector seems to be quite influential in the economic growth of India, the Investor Charter will be expedient to be the governing document that will direct the course of invITs operations and set the interests of unitholders first.