SEBI’s New Disclosure Norms for REITs and InvITs- Regulatory Accountability Deepened

[Purnima is a student at Symbiosis Law School, Pune.]

The Securities and Exchange Board of India (SEBI) has published a significant set of amendments to the disclosure norms for real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). Initially made public by a circular issued on 5 March 2023, these recent changes highlight SEBI's keen focus on standardization, transparency, and the importance of timely dissemination of information with respect to instruments used in capital markets. Nevertheless, even if these vehicles operate in relatively specialized asset heavy areas, the regulatory expectations are now analogous to corporate issuers more broadly demonstrating a convergence in regulatory compliance philosophy.

Evolving Regulatory Architecture for Trust-Based Investment Vehicles

The recent circular amended the disclosure requirements already existing under the SEBI (Infrastructure Investment Trusts) Regulations 2014 and SEBI (Real Estate Investment Trusts) Regulations 2014. These amendments, made after consultation with market participants and are a part of SEBI's objective to bring Indian REITs and InvITs in line with international industrial standards. The circular has a requirement for an audited financial disclosure for the last three financial years (or since inception, if shorter), which is meant to reinforce financial history.

In the case that the annual financials are more than 6 months old, SEBI also required stub financials - these stub financials can be unaudited but subject to limited review - for the intervening period. This requirement is meant to avoid any degradation of information at the time of filing an offer document. By requiring timely and comparable reports, SEBI is reinforcing their investor-first view, and is advocating for finance gathering activities to occur in a timely manner compared to the financial disclosures made.

Project Level Granularity and Risk Disclosure

One of the major advances that the new framework introduced requirement for project-wise cash flows, operating metrics and contingent liabilities. In markets such as real estate and infrastructure, where performance of the asset is inherently project based, this enhances the investor's ability to understand the viability and return characteristics of the asset. It also has controls on the ways in which risks work across the portfolio and the management of those risks.

At the same time SEBI now requires separation of language around debt and equity. Trusts cannot describe their documents in corporate fashion of "share capital" and "shareholders" and have to use Trust four specific language such as "unit capital" and "unit holders." This snappy change  (and enviable adjustment) has disturbing legal and financial reporting effects. It solidifies the non-corporate distinction between these and not confusion to foreign institutional lenders where the two are often conflated.

The new rules also provide greater likelihood to report segmental information for each project or investment asset. Given the complexity of geographies, asset classes and stage of project, this sort of disaggregate data can better display risk adjusted returns for investors, while monitoring portfolio longevity. This addresses the market desire for more bottom-up analysis especially in adverse cycles.

Enhancing Timelines and Result Reconciliation

SEBI has implemented a tougher reporting timeline—quarterly financial results must now be reported within 45 days of the quarter end and annual results must now be reported within 60 days of the fiscal year-end. Furthermore, there is now a requirement to reconcile the audited annual figures with the previously issued unaudited quarterly figures. This reconciliation requirement creates a significant regulatory gap and prevents year-end adjustments that are otherwise untracked.

The emphasis on timeliness will also be crucial in industries where project execution delays and cost overruns will likely exist. SEBI hopes to provide a more predictable and consistent financial cycle and regain investor confidence while lessening the information asymmetries in these complex asset classes. For asset managers and sponsors, this requires greater financial discipline and preparedness internally, and especially so during market cycles when they are frequently capital raising.

Enhancing Transparency in Unit Holding Structures

Another forward-looking provision is the requirement for periodic disclosures of unit holding patterns—at the time of listing, every quarter, and after major capital changes. This aligns with SEBI’s ongoing pursuit of ownership transparency across listed entities. Particularly in the case of sponsor-held or closely held trusts, this provision allows minority unit holders and analysts to monitor control dynamics and governance issues.

Furthermore, entities undergoing material restructuring, acquisition, or asset transfers during a financial year are now required to publish pro forma financials. This ensures that investors have a fair view of the “new” operational profile of the trust post-transaction. It is noted that these changes will significantly raise the disclosure bar for large REIT and InvIT players who are actively engaged in inorganic growth strategies.

In addition, enhanced disclosures surrounding valuation methodologies have been mandated. InvITs and REITs will need to provide transparent explanations of the assumptions, data sources, and expert opinions used in asset valuation. This ensures that valuation risks are made more visible to investors and aligns with global practices, particularly in developed REIT markets like Singapore and Australia.

Alignment with Global Disclosure Regimes and Market Expectations

These disclosure enhancements are not merely procedural—they constitute a recalibration of the regulatory equilibrium. The harmonization with International Financial Reporting Standards-like principles and the move toward more frequent and granular disclosures aim to attract sophisticated investors, including global pension and sovereign wealth funds.

By reducing data opacity and increasing standardization, SEBI is attempting to position Indian REITs and InvITs as credible investment avenues on par with their global counterparts. The underlying message is clear: as these instruments evolve beyond vanilla yield plays to become vehicles for institutional capital deployment, their governance and disclosure frameworks must mature in parallel.

As Indian infrastructure ambitions scale, the availability of long-term patient capital becomes essential. InvITs and REITs offer that opportunity—but only if their regulatory architecture ensures investor confidence. SEBI’s latest move is a step in that direction, underscoring its belief that regulatory maturity and market growth must go hand in hand.

Conclusion

The combination of the May 2025 circular is an integral part of SEBI’s overarching strategy to promote institutional confidence and depth in the market. While there is some perception that REITs and InvITs are niche products, the regulator’s focus on transparency and investor safety is indicative of the importance of the products in India’s infrastructure and real estate financing landscape. While SEBI’s current reforms may do little more than demand a very difficult compliance re-adjustment for the near term. SEBI’s next steps are anticipating long term stability in the capital markets and therefore rather than destabilizing, SEBI’s regulatory framework is looking to establish a healthy degree of institutional convergence and stability. In doing so, they are making clear: access to public capital - comes at the cost of accountability.

As the regulatory perimeter expands and matures, the distinction between corporate issuers and trust-based entities will continue to blur—at least in terms of compliance expectations. Market participants should recognize this shift not as a burden, but as an opportunity to align with best practices and elevate the investment case for Indian InvITs and REITs on the global stage.