Market Regulator Introduces Regulatory Guidelines for Depository Receipts on Infrastructure Trusts

The Securities and Exchange Board of India has introduced a comprehensive operational framework governing the issuance of depository receipts on units of Infrastructure Investment Trusts (InvITs). The regulatory guidelines outline specific parameters encompassing issuer eligibility criteria, mandatory listing requirements within International Financial Services Centres (IFSCs), structural pricing rules, extensive investor disclosures, and strict ongoing compliance obligations. These provisions create a regulated pathway for foreign capital participation in domestic infrastructure vehicles through depository instruments. Cross-border investment structures traditionally rely on depository receipts to bridge domestic asset classes with international capital pools, offering overseas participants a familiar equity-like instrument.

Previously, the absence of a clear regulatory blueprint restricted the issuance of depository receipts against domestic infrastructure trust units, limiting overseas funding avenues. Under the new SEBI framework, eligible issuers can structure these instruments under defined regulatory oversight, shifting from an unguided environment to a standardized procedure that mandates specific IFSC exchange listings and transparent pricing norms. Market participants, legal advisors, and compliance consultants should examine the eligibility prerequisites and IFSC listing mandates before structuring depository receipt offerings on InvIT units. Issuers and intermediaries must update their disclosure practices and governance protocols to satisfy SEBI's strict pricing and compliance requirements.

Stakeholders should actively monitor forthcoming exchange circulars and operational guidelines issued by International Financial Services Centres for procedural execution details. Bottom line: This framework opens new cross-border fundraising channels for infrastructure funds while imposing rigorous compliance standards.