Regulatory Updates#23: SEBI on InvITs, TRAI on data-packs & more

Bar & Bench will bring to you the latest regulatory and policy updates from different ministries and regulatory authorities. In this edition of the Bar & Bench Regulatory Updates, we analyse the latest updates by the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Telecom Regulatory Authority of India (TRAI)..SEBI proposes financial disclosure norms for InvITs.SEBI last week issued a consultation paper laying down guidelines for disclosure of financial information in offer documents and valuation for units of Infrastructure Investment Trusts (InvITs). The consultation paper has been prepared keeping in mind that InvITs might hold infrastructure assets through special purpose vehicle as well as directly..SEBI has defined the term ‘valuer’ to mean an eligible ‘registered valuer’ under Section 247 of the Companies Act, 2013 (Act) and defines the various categories of ‘registered valuer’ till the time Section 247 comes into force..As per the guidelines, while preparing their annual financial information (for InvITs which have been in existence for three years or more) and combined financial statements (for InvITs which have been in existence for a period of less than three years), InvITs are required to follow the principles laid down in the Indian Accounting Standards (Ind-AS). The guidelines further elucidate on the minimum inclusions and the line of items to be followed while preparing such statements. All such disclosures must also be duly audited by the auditor appointed for the InvIT as per the InvIT Regulations..The guidelines also propose the applicability of Ind-AS 24 i.e. Related Party Disclosures while preparing financial statements..The paper also requires the Managers and Sponsor(s) of the InvITs to disclose its audited consolidated financial statements, which are required to be prepared in accordance with the Act and allied rules, and for foreign entities in accordance with International Financial Reporting Standards..InvITs are also required to prepare:.A Management Discussion and Analysis, inter alia, giving reasons for changes in income and expenditure and factors that are likely to affect results of operations, key risks and mitigating factors;Project-wise projections of revenues and operating cash flows for InvITs;A history containing the interest and principal payment of the InvIT and a statement regarding sufficiency of the working capital..In addition to the disclosures required under Schedule V of the InvIT Regulations, SEBI has also proposed mandatory disclosures in the valuation report including adequate information about the valuation and other aspects of the underlying assets of InvIts..Master Directions.The RBI has issued another series of Master Directions which consolidate all the notifications/circulars of the respective subjects. The Master Directions inter alia include:.1. Money Market Instruments.Money market is a market for short-term financial assets that are close substitutes of money. The Directions, inter alia, provide for eligibility, procedure of issuance and denominations of these four kinds of instruments viz. (i) Call and Notice Money Market; (ii) Commercial Paper; (iii) Certificates of Deposit and; (iv) Non-Convertible Debentures of original maturity up to one year..2. Lead Bank Scheme.The Lead Bank Scheme was introduced in 1969 by the RBI with the aim of enhancing the flow of bank finance to priority sector and to promote banks’ role in overall development of the rural sector. The Directions inter alia provide for functioning of committees at block level, district level and state level and rules governing conduct of meetings..TRAI proposes increasing validity of data-packs to one year.The TRAI has issued the Draft Telecom Consumers Protection (Tenth Amendment) Regulations, 2016 for public consultation inviting comments of the stakeholders..Under the extant regime, special tariff vouchers (STVs), either exclusively or in combination of other tariff items are permitted for a maximum period of 90 days. This makes data-packs (special tariff voucher with only data benefits) unaffordable for a large chunk of the population who have recently begun using internet as, significant portion of the volume of data offered remains unutilized by them..Taking into consideration the new prepaid consumers i.e. first-time mobile consumers and consumers who have migrated from some other service provider’s network, TRAI has proposed to extend the validity of ‘data-only STVs’ to a period of 365 days.